Macro

Real Estate Bubble Trouble

Bitcoin Soars Near Highest Since 2014 As China Outflows Accelerate

For the past few weeks we have been detailing the tightening of China capital controls and what that may mean for Bitcoin. It appears the outflows (that offshore Yuan weakness relative to onshore Yuan suggests) are accelerating as Bitcoin just traded above $314( near the highest since December 2014.

Perhaps today's acceleration is on the heels of The Fed statement and expectations of a response from China...

As we recently concluded, the last week or two suggest, perhaps more importantly, that China easing (and outflows implict from further devaluation) now appears to go straight to Bitcoin.

As Overstock's Chairman noted previously: gold is great, but tough to transport; thus, forcing Chinese into Bitcoin as we previously explained:

As we concluded previously, while China is doing everything in its power to not give the impression that it is panicking, the truth is that it is one viral capital outflow report away from an outright scramble to enforce the most draconian capital controls in its history, which - as every Cypriot and Greek knows by now - is a self-defeating exercise and assures an ever accelerating decline in the currency, which authorities are trying to both keep stable while also devaluing at a pace of their choosing. Said pace never quite works out.

Glencore shrinking its $18 bln commodity inventory mountain

The biggest player in the secretive commodities trading industry to hold a public share listing that requires it to disclose its accounts, Glencore has been battered by the global downturn in commodities prices.

Worries about its $30 billion debt burden saw its share price lose nearly two thirds if its value so far this year. The firm has pledged to reduce its debt by $10 billion by suspending dividends, reducing investments and selling some assets in order to protect its investment grade debt rating.

Sources close to the company say it is also reducing its vast trading inventory, driven in part by the winding up of "contango" market conditions, under which long-dated futures contracts were priced higher than spot prices, encouraging traders to store material to resell it at a profit later.

"If you look at where commodities prices are today and how the market conditions changed in the past six months - it is fair to say that the only way for inventories is to go down," a source close to Glencore said.

That could help appease ratings agencies such as Moody's and S&P, which both rate Glencore just two notches above junk, with a negative outlook that means its investment grade rating is in jeopardy.

"Sometimes the balance sheet is just more important than the contango play," said the source close to the company.

A rating cut would raise the cost of borrowing. Some brokerage analysts see this as a potential threat to Glencore's business model. Glencore denies it would have a major impact but says it wants to avoid it anyway.

Despite the steep fall in commodities prices since last year, the total value of Glencore's inventory has barely budged, another way of saying that the volume of hydrocarbons, metals and other commodities the firm is holding has ballooned in size.

Under the "contango" conditions in place at the start of 2015, when traders expected the price of oil to recover from last year's steep falls, the cost of buying and storing it was lower than the price for contracts to deliver it in future months. Traders responded by storing millions of barrels in ships and inland tanks to earn a profit selling it later.

But in recent months, with a global oil glut growing, the cost of storage rising and the market now expecting low prices to persist longer, future prices for many commodities have fallen closer to, or lower than, spot prices. That means there is less to be earned from holding inventory.

Hence traders ranging from BP to Vitol have been reducing inventories. When Glencore presents investors with an update on Nov 4 it will most likely show a cut in inventory of billions of dollars.

State Grid 3Q UHV electricity sales up 10.5pct on year

The State Grid Corp. of China (SGCC), the world’s leading power utility company, realized 114.04 TWh of electricity transaction through its ultra-high voltage (UHV) power transmission lines during the first three quarters of the year, posting a year-on-year rise of 10.46%, said the company on October 22.

Total electricity sales of the company between January and September stood at 537.7 TWh, falling 1.74% year on year, it said.

The four major UHV DC power transmission lines—Fufeng, Jinsu, Tianzhong and Binjin—have transmitted a total 100.15 TWh of electricity to eastern and central China by October 13 this year, saving more than 40.1 million tonnes of standard coal equivalent.

Between January and September this year, Fufeng, Jinsu and Binjin UHV power transmission lines transmitted a total 75.34 TWh of electricity, rising 8.44% on year. Tianzhong transmission line transmitted 19.43 TWh of electricity during the same period, up 120.3% on year.

Newly-added installed capacity of the company amounted to 89.96 GW during the same period, with hydropower, thermal, nuclear, wind and solar power at 8.68GW, 52.26GW, 3.18GW, 11.44GW, and 10.38 GW, respectively.

Total power generating installed capacity of the company stood at 1.1 TW by end-September this year, a year-on-year rise of 9.7%.

The power consumption within the company’s business area was expected to rise 0.6% from the previous year to 1,126 TWh in the fourth quarter; while that of the whole year would reach 4,385 TWh, up 0.5% on year, the State Grid Energy Research Institute said.

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"Debates in Turmoil" would have been an appropriate summary for tonight's free-for-all CNBC-sponsored screamfest in Boulder, Colorado. Argumentative moderators, mis-stated facts, time complaints, and general whining was everywhere but Trump still managed to come out the other side of this gauntlet unscathed. One major highlight included Santelli and Paul pushing 'Audit The Fed', calls for gold-backed currency,and exclaimed thatThe Fed "has been a great problem" in US society. However, what was odd was the apparent slights to Trump and Carson (questioned less directly) which resulted in an aberrantly low 'talking time' for the leading candidates

.But across all polls, Trump was the clear winner in the main event (and Bush nearly the biggest loser)...

Source: Drudge (left) and CNBC (right)

And Bush was the "biggest loser"..Jeb Bush finally, 85 minutes in, gets to talk about his plan for 4% growth. It’s hard to figure how bland talk of reform is going to win him much new support. There was no applause for his explanation...

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EU member states reach compromise on car engine tests

European countries reached a compromise deal on new testing rules for cars on Wednesday that allows vehicles to carry on emitting more than twice agreed pollution limits despite an outcry caused by the Volkswagen emissions scandal.

The agreement, thrashed out in extended talks, diluted a proposal from the European Commission, the EU executive, after many of the 28 member states demanded leeway to protect the car industry.

EU sources, speaking on condition of anonymity, said the Netherlands had been among a handful of countries seeking stricter rules and it alone voted against the compromise as too weak.

Before the talks that began at 10 am (0900 GMT) and finished around 3.30 pm, two hours later than planned, national position papers seen by Reuters showed deep divisions between nations.

Among those calling for more latitude for the car industry, the German government said: "the diesel engine should be preserved as a powertrain option on the mass market." Germany also said controls on enforcement of legal limits needed to be pragmatic.

The European Commission had heaped pressure on EU governments to reach a swift deal.

Industry Commissioner Elzbieta Bienkowska said earlier on Wednesday if member states could not agree, they would dent consumer confidence and have negative consequences for the automotive industry.

The European Commission proposed "real-world" testing would become operational from next year, but would only take full effect after a two-year phase-in for new vehicles from 2017.

Instead, the compromise agreed on Wednesday sets a "conformity factor" of 2.1 from late 2017, meaning cars could emit more than twice the official limit.

Two years later, it would fall to 1.5, the EU sources said, meaning vehicles could emit nitrogen oxides, associated with respiratory disease and premature death, up to 50 percent above the legal ceiling.

Volkswagen is battling the biggest business crisis in its 78-year history after admitting in September it installed software in diesel vehicles to deceive U.S. regulators about toxic emissions.

In Europe, a failure to close the gap between NOx emissions in real driving conditions compared with tests, confirmed by European Commission research, has drawn unfavourable comparisons with Washington's track record in policing business.

"We will now look at all legal means to challenge this decision and will push for the European Parliament to object to the proposal," Green environment spokesperson and vice-president Bas Eickhout said in a statement.

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Early Forecasts Show China Economy Stabilizing in October

With a preliminary reading of the manufacturing industryscrapped this month by Markit Economics and Caixin Media, analysts must search a bit harder for the pulse of the world’s second-largest economy. Early signs suggest stabilization.

Domestically compiled gauges of manufacturing and services improved in October, while an index based on search engine data for small and medium-sized businesses weakened slightly. They come ahead of official Purchasing Managers’ Indexes for manufacturing and services, both due Sunday.

The People’s Bank of China cut interest rates for the sixth time in a year last week amid mounting challenges to the government’s growth target of about 7 percent for 2015. As economists set their forecasts for future policy moves, here are a few early indicators that may help:

The unofficial purchasing managers indexes jointly compiled by China Minsheng Banking Corp. and the China Academy of New Supply-side Economics showed a much sharper slowdown in the summer and a faster pickup since then.

The manufacturing reading rose to 43.3 this month from 43 in September, while the non-manufacturing measure climbed to 44.2 from 42.3. PMI readings below 50 signal contraction.

Jia Kang, director of the Beijing-based academy and former head of the finance ministry’s research institute, expects more attention will shift to the Minxin gauge after Caixin stopped publishing its flash PMI.

"This is a very sensitive indicator,” Jia said. "When the official PMI was still steady, we already noticed a downward trend,” and now the gauge has reversed to signal a pickup.

The monthly surveys cover purchasing managers at more than 4,000 companies, mainly private business and smaller enterprises. The gauges started in October 2014. In contrast to the official measure, which has shown non-manufacturing businesses holding up better this year, services are also mired in contraction zone in the private survey.

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Barclays Bankers Create $1.7 Billion Commodities Buyout Firm

The bankers behind the private-equity investments of Barclays Plc in the natural resources sector bought the business from the British lender, creating a new buyout firm with $1.7 billion in assets.

The management-led deal forms Global Natural Resource Investments, a London-based private equity firm with offices in Doha, Qatar, that will focus on commodities deals outside the U.S. oil and gas upstream sector, the company said on Wednesday in a statement. GNRI didn’t disclose how much it paid.

Barclays, which has scaled back its presence in commodities over the past five years, will remain an investor alongside the sovereign wealth fund of Qatar. The billionaire brothers Eddie and Sol Zakay are also investors.

“The requirement for private equity capital in the global natural resources sector is stronger than ever and the current volatility in commodity prices is creating a positive backdrop for patient private equity,” said GNRI Chief Executive Officer Mark Brown, who previously headed Barclays’s natural resources investments.

Brown said the business has returned 2.4 times the money invested since its inception in 2006 as a unit of Barclays. Of the $1.7 billion that GNRI has under management, the company has yet to invest $800 million.

The new buyout joins a rush of private equity firms searching for deals in the natural resources sector after oil and other commodities prices plunged. The top four private-equity groups, Carlyle Group LP, Apollo Global Management LLC, Blackstone Group LP and KKR & Co., have raised at least $30 billion for commodities deals in the past 18 months, according to data compiled by Bloomberg.

Former bankers and executives, including Mick Davis, a past chief of Xstrata, Barrick Gold Corp.’s ex-CEO Aaron Regent, former JPMorgan Chase & Co. banker Lloyd Pengilly and Sam Laidlaw, once chief of Centrica Plc, have set up companies and funds to bid for assets put up for sale by the world’s biggest oil and mining companies.

Brown, who is taking a team of around 14 people with him, said his company wasn’t just another startup private-equity firm trying to raise funds.

“The difference is we have a portfolio,” he said in an interview. “We have invested in 15 companies, and we are managing $1.7 billion. It’s a real business: we have copper assets in Botswana and Peru, we are drilling in the North Sea.”

The former Barclays banker said the biggest opportunities lay in copper, oil and gas. He cautioned, however, that the drop in commodities prices hadn’t yet created a buyers market, other than for poor assets he wasn’t interested in. “Good assets are still commanding premium prices,” Brown said.

Look at Waste Shipements in the EU and USA: Going down?!

Bitcoin Breakout?

European Parliament adds to pressure for cleaner car industry

The European Parliament on Tuesday stoked the pressure on EU regulators to end emissions cheating in the car industry with a resolution urging swift adoption of tougher vehicle testing and early results of investigations into what went wrong.

Europe's largest carmaker Volkswagen is battling the biggest business crisis in its 78-year history after admitting in September it installed software in diesel vehicles to deceive regulators about their toxic emissions.

The European Commission, the EU executive, has had evidence for years of a yawning gap between the performance of cars in the real world and in test conditions and has proposed legislation to improve the testing regime.

A resolution backed by a majority of members of the European Parliament meeting in Strasbourg demanded the Commission report to the EU assembly following "a full and transparent investigation" by the end of March next year.

It also called for swift implementation of real driving emissions tests to close the gap between the amount of emissions cars produce on the road as opposed to in artificial test environments.

"We now have the political momentum for a radical overhaul," Liberal Democrat politician Catherine Bearder said in a statement.

The resolution is not binding but increases pressure on the Commission and member states, whose representatives are expected to vote in a closed-door meeting on Wednesday on the proposed new testing regime.

The Commission has proposed real-world testing for nitrogen oxides should begin next year but full implementation for new models would only be phased in from 2017, seven years after the European Commission announced the initiative.

Carole Dieschbourg, environment minister for Luxembourg, holder of the EU presidency, said after a meeting on Monday that ministers from most nations had expressed the need for urgent action, while Industry Commissioner Elzbieta Bienkowska said ministers were "very close" to agreeing a compromise.

EU sources have said the nations lobbying to weaken the proposal include Germany, home to Volkswagen.

"Governments like Germany's must rise from under the wheels of the car lobby to put air quality before big business," Greenpeace climate and energy expert Jiri Jerabek said.

Nitrogen oxides from diesel cars are a prime source of air pollution that has been blamed for more than 400,000 premature deaths in the EU yearly, according to Commission data, and costs up to 940 billion euros ($1.04 trillion) annually because of health bills.

Separately, the European Parliament will on Wednesday vote on proposals to reduce limits for air pollutants, such as nitrogen oxides. Member states will get their chance to rule on the plans later this year.

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A climate change deal to be agreed in Paris in December will not be able to come up with a global carbon price, the United Nations' climate chief, Christiana Figueres, said on Tuesday.

Big multinational companies and investors, and most recently oil majors, have called for a global carbon price to help spur investments in low-carbon energy.

A global carbon price would help to create an incentive for operators of power plants and factories to switch to cleaner fuels such as gas or to buy more energy-efficient equipment.

When the European Union launched a carbon trading scheme in 2005 there were expectations this would eventually lead to a global carbon scheme by 2020 worth around $2 trillion.

But the difficulties of bringing together different carbon schemes from countries around the world means the goal of a global carbon price remains elusive.

"(Many have said) we need a carbon price and (investment) would be so much easier with a carbon price, but life is much more complex than that," Figueres told a climate investor event in London.

"I agree it would be more simple ... but it's not quite what we will have," she said, adding that the world would move towards that in the future.

Figueres said six jurisdictions around the world already have a carbon price or carbon pricing mechanism such as a tax.

"I would argue we already have a strong carbon price signal," she said.

Countries are due to meet in Paris from November 30 to December 11 to agree on a global deal to cut greenhouse gas emissions and tackle climate change.

This month, the leaders of 10 companies that produce 20 percent of the world's oil and gas recognised that current greenhouse gas levels were inconsistent with a goal of limiting global warming to 2 degrees Celsius over pre-industrial times. But they stopped short of outlining goals to cut their own emissions.

Duke Energy to buy Piedmont Natural Gas in $4.9billion deal

Duke Energy will buy Piedmont Natural Gas in a $4.9billion deal as it looks to expand its natural gas distribution business.

The company offered $60 in cash for each Piedmont share representing a premium of around 42%.

Duke and Piedmont are also among the partners in the $5 billion 550-mile Atlantic Coast pipeline, which moves gas from Pennsylvania’s Marcellus shale field to North Carolina and Virginia.AGL resources also has a 5 percent stake in the pipeline.

Duke sells power to 7.3 million customers in North and South Carolina, Florida, Indiana, Ohio and Kentucky at rates set by state regulators.

The company also provides regulated natgas services to about 500,000 customers in Ohio and Kentucky.

Piedmont has about one million customers in North and South Carolina and Tennessee.

Duke will also assume about $1.8 billion of Piedmont’s net debt, giving the deal an enterprise value of $6.7 billion.

One Piedmont director will join Duke’s board after the deal closes, expected by the end of 2016, and a Piedmont executive will lead Duke’s natural gas operations, the company said.

Argentine assets gain after strong Macri election showing

Conservative opposition candidate Mauricio Macri's surprisingly strong showing in presidential elections set up a second vote next month.

With almost 97 percent of polling stations declared, the pro-business mayor of Buenos Aires had won 34.4 percent of the vote, enough to prevent the candidate of Argentina's ruling party, Daniel Scioli, from claiming an outright victory.

To win the Nov. 22 run-off, Scioli, who is backed by outgoing leftist President Cristina Fernandez and had a clear lead in opinion polls last week, will need to court supporters of third-placed candidate Sergio Massa, a moderate lawmaker.

"Macri will have momentum now and Massa is now the kingmaker," Dehn said. "If Sciolo wants his votes he needs to become more moderate."

The outcome of the election will shape how the South American country tackles its economic woes, including high inflation, a central bank running precariously low on dollars and a sovereign debt default.

Scioli is running on a platform of "gradual change" and has promised to maintain popular welfare programs while Macri advocates moving quickly to open up the economy.

Macri is seen by international investors as the candidate most likely to negotiate with a group of "holdout" hedge funds whose suit over bonds defaulted on by Argentina in 2002 caused a new and ongoing default last year.

BHP seen approaching an M&A ‘sweet spot’ in hunt for deals

BHP Billiton Ltd. is snapping up oil-exploration prospects from the U.S. to Australia and flagged this week that it’s seeking to make more similar investments. There’s speculation it’ll also target deals for operating wells and mines.

BHP confirmed Wednesday it secured about 13,000 square kilometers (5,000 square miles) for petroleum exploration off the Western Australia coast and had been awarded leases in the Gulf of Mexico. The Gulf purchase came after it made high bids worth about $16.3 million in an August sale, according to the Bureau of Ocean Management. It signed a farm-in and operating agreement in July to take a controlling interest in an Australian exploration block with Cnooc Ltd., China’s biggest offshore oil and gas explorer.

The company is pursuing high-quality oil plays in the deepwater Gulf, the Caribbean and Beagle sub-basin in Western Australia, it said in a

BHP was among companies that entered the final round of bidding to buy a stake in Barrick Gold Corp.’s Zaldivar copper mine in Chile, people familiar with the matter said in June. Antofagasta Plc in July agreed to buy a 50% interest in the asset for about $1 billion.

As distressed competitors are forced to sell quality assets, dealmaking may be the logical next step for BHP as it manages the commodities rout, Lennox said. “In terms of the sequence of this low commodity price cycle, they’ve done all the right things,” he said. “When you’ve got through all of that and have a balance sheet in relatively good shape, then what’s left? Mergers and acquisitions.”

Chief executive Helge Lund said: "We are on track to deliver our promised operating and capital cost savings for 2015 and are adding new low cash cost volumes through Australia and Brazil. These actions will help mitigate the impact of lower commodity prices on our financial results.

"We continue to work with Shell on integration planning and to secure the necessary regulatory approvals ahead of the shareholder vote. The transaction remains on track to complete in early 2016."

Oil Producers Curb Megaproject Ambitions to Focus on U.S. Shale

A stubborn 16-month crude rout with no end in sight is driving the largest U.S. oil producers away from costly, high-risk megaprojects long touted as the industry’s future and toward safer shale operations that generate the cash needed to satisfy anxious investors.

Exxon Mobil Corp., Royal Dutch Shell, Chevron Corp., ConocoPhillips and Hess Corp. have all either delayed or abandoned projects that range from the deep seas of the Gulf of Mexico to Canada’s oil sands and the U.S. Arctic. At the same time, Exxon and Chevron both announced plans to substantially increase U.S. crude production, largely as a result of their shale operations.

“What makes more sense in this environment: drill a $100 million well in the deepwater Gulf that might come up empty, or poke lots of holes in west Texas where you already know there’s oil for a few million apiece?” said Michael Webber, deputy director of the University of Texas Energy Institute.

Explorers are expected to slash spending on deep-water wells by 20 percent to 25 percent next year, compared with a 3 percent to 8 percent overall reduction on all types of fields, according to Barclays Plc analysts including J. David Anderson. The type of giant reservoirs that require megaproject treatment are now found in only the roughest, deepest and coldest parts of the world.

One example: An equipment failure forced Chevron to put its $5.1 billion Big Foot development, a deepwater Gulf of Mexico project that was supposed to begin pumping crude this year, on hold until at least 2018. The San Ramon, California-based company hasn’t said whether the delay will bloat the price-tag, which already had risen 28 percent from a 2010 estimate of $4 billion.

International producers are failing to deliver 80 percent of megaprojects on time and on budget, compared with about 50 percent in 2005, said Neeraj Nandurdikar, oil and gas director at Independent Project Analysis Inc.

Exxon and Chevron may update investors on their biggest ventures when they report third-quarter results on Friday. “Chevron is taking actions responsive to the current price environment,” said Kurt Glaubitz, a company spokesman. “We are getting our cost structure down and actively managing to a smaller capital program.” An Exxon spokesman declined to comment.

ConocoPhillips, the third-biggest U.S. oil producer, canceled in July plans to search the deep Gulf of Mexico this year. Terminating a long-term rig lease may cost the Houston-based company as much as $400 million.

The shale drilling boom led to a supply glut that deflated prices by more than half since 2014 and shale remains one of the most economic options for producers. For Exxon and Chevron, that’s meant rededicating their spending to a region they’d mostly ignored for the half century before the shale boom while they pursued giant overseas discoveries.

“Projects are getting bigger and bigger and they are failing more often,” said Howard Duhon, systems engineering manager at Gibson Applied Technology and Engineering Inc., which advises major oil companies on how to design deep-water projects. Equipment is more complex and project teams are three or four times bigger, and “it’s not clear we’re getting any better results,” he said.

Marathon Oil Cuts Quarterly Dividend by 76% to Preserve Cash

Marathon’s Dec. 10 payout to investors will drop to 5 cents a share from 21 cents, the company said in a statement Thursday. The dividend cut is expected to increase annual cash flow by more than $425 million.

“We believe the revised dividend appropriately addresses the uncertainty of a lower for longer commodity price environment,” Lee M. Tillman, the company’s president and chief executive officer, said in the statement.

Iran Seen Jolting Oil Market With 90-Day Supply After Sanctions

Iran may roil global oil markets with plans to sell about 45 million barrels of fuel stored in tankers in the Persian Gulf within three months of the removal of sanctions on its economy, according to analysts.

Most of the stored oil is condensate that contains a sulfur compound, which complicates sales because many refineries can’t process it, said Victor Shum of IHS Inc. and Robin Mills at Dubai-based Manaar Energy Consulting. To market this large amount of oil within three months -- the equivalent of about half a million barrels a day -- Iran will have to resort to offering deep discounts, they said.

“Iran’s getting ready to open the taps,” Shum, IHS’s head of oil market research, said by phone on Oct. 26. “If they want to unwind this supply in the current weak market, they’ll have to offer discounts. It’s a buyer’s market.”

The country is seeking to claw back the market share it lost under sanctions by boosting oil exports after a July deal with world powers to return to energy and financial markets. The condensate in tankers moored off its southern coast will add to a worldwide oil glut, putting more pressure on crude prices that have dropped more than 40 percent in the last year. Sanctions curbed Iran’s sales of crude and condensate to 1.4 million barrels a day in 2014 from 2.6 million in 2011, the U.S. Energy Information Administration said in June.

Iran pumped 2.8 million barrels of crude a day in September, making it the fifth-largest producer in the Organization of Petroleum Exporting Countries, according to data compiled by Bloomberg. It plans to boost crude production and exports by 500,000 barrels a day within a week after sanctions are lifted,Roknoddin Javadi, managing director of state-run National Iranian Oil Co., said Oct. 21 in an interview in Tehran. Iran will add another 500,000 barrels in daily sales within six months after curbs are removed, he said.

Shipments of the 45 million barrels of condensate over three months would come on top of these planned crude exports, Javadi said, and surpass current expectations about the wave of Iranian oil poised to hit the market. The condensate, a light hydrocarbon liquid, is pumped from the offshore South Pars natural gas deposit.

“What is probably in the price consensus is around a half-million-barrel-a-day hike” in shipments, Eugen Weinberg, an analyst at Commerzbank in Frankfurt, said by phone on Oct. 28. “If the increase is stronger than expected, it’s likely to have a negative impact on the price.”

China unveils four more shale gas fields, soon to commercialize

China unveiled four more shale gas fields in the country. These fields have potential for commercial use. That's why the country is confident in becoming the third largest shale gas producer this year after the US and Canada. But the efficiency of shale gas in the country remains uncertain.

"The abundance of shale gas reserves in China is encouraging. There's one field, which is only 3,800 square meters in scale, but has 3,800 cubic meters of shale gas. That's a treasure," said Zhai Gangyi, oil & gas director of China Geological Survey.

"The production of shale gas in China in 2014 was six times the amount in 2012, hitting 130 million cubic meters. This year, the production is set to be over 5 billion cubic meters. That means China will become the world's third largest shale gas producer," said Ren Shoumai, researcher of China Geological Survey.

But that target is facing challenges. That's the word from the country's powerful economic planner, the NDRC. Although China is preparing for a US-style shale gas boom, the demand for energy lost steam on the cooling economy this year. Both foreign and domestic companies halted exploration work.

Range Resources Corporation announces third quarter 2015 results

Highlights

= Unit costs declined by $0.36 per mcfe, or 12% compared to the prior-year quarter.= Production volumes averaged 1,445 Mmcfe per day, a 20% increase over the prior-year quarter.= Marcellus production averaged 1,277 Mmcfe per day, a 27% increase over the prior-year quarter.= First Utica well in Washington County, Pennsylvania estimated to have 15 Bcf EUR, or 2.8 Bcf per 1,000 feet of lateral.= Second Utica well brought online with choke management at 13 Mmcf per day rate and projected to = have higher EUR than the first well.= Full-year 2015 capital budget of $870 million is on track to deliver 20% annual year-over-year growth.= Mariner East I with full operations for propane and ethane expected by the end of the year.

Commenting, Jeff Ventura, Range's Chairman, President and CEO, said:

'Our operational results in the third quarter continued to improve during this challenging commodity period. Range is expecting to deliver our 20% production growth target in 2015 from a significantly lower capital budget of only $870 million, compared to $1.5 billion in 2014. We believe Range has one of the most capital efficient operations in the industry and we expect to continue improvements in 2016 and beyond. The keys to increasing capital efficiency are our large, concentrated, stacked pay acreage position that can deliver high quality returns at low-cost and right-sized takeaway capacity to move products to better or improving markets. This gives Range a sustainable competitive advantage in the current market and becomes more important as the natural gas markets improve.

'We are continuing to work on potential non-core asset sales for areas in our portfolio that cannot compete against the Marcellus for capital. Range expects to close one or more non-core asset sales prior to year-end. Any sales proceeds will be used to reduce debt and strengthen our balance sheet. Importantly, we are continuing to drive down costs and implement innovative marketing solutions that are expected to deliver improved margins. We also see signs of improved pricing ahead, especially in Appalachia, as the Mariner East I project becomes fully operational by year-end and completion of other infrastructure projects to move natural gas and NGLs out of the basin. Each of these projects is expected to improve the basis differentials in the southwest area of the Marcellus in the near-term. These projects, combined with the industry slowdown and reduction in capital spending, should help to bring supply and demand in balance both nationally and regionally, thus improving our prices and margins going forward.'

Capital Expenditures

Third quarter drilling expenditures of $188 million funded the drilling of 25 (20 net) wells with a 100% drilling success rate. During the third quarter, 31 wells were turned to sales. In addition, during the third quarter, $9 million was expended on acreage, $6 million on gas gathering systems and $4 million for exploration expense. Range is on target with its $870 million capital budget for 2015. Similar to recent years, the 2015 capital budget is front-end loaded and has been redirected to more dry gas drilling to maximize expected rates of return. The Company started the year running 15 rigs, is currently running five rigs and plans to finish the year with five rigs. Range expects to have 50 to 60 wells waiting on completion at the end of the year, consistent with prior-year averages.

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Genel Energy sells 20% interest in Kurdistan PSC

Genel Energy has announced the sale of a 20% participating interest in the Chia Surkh Production Sharing Contract, in the Kurdistan region of Iraq, to Petoil Inc.

As consideration for the sale of the 20% interest, Petoil will carry Genel's share of the costs associated with the Chia Surkh-12 (CS-12) appraisal well. The total cost of the CS-12 well is estimated at about $50 million, with drilling expected to commence in first-quarter 2016.

The drilling will help refine the contingent resource estimate for the Chia Surkh license, which is currently estimated at 250 MMboe.

On completion of the transaction, which is subject to Kurdistan Regional Government (KRG) approval, Petoil will transfer $10 million to Genel in the form of security, which will be released at different stages of well operations in accordance with cash calls, wellcompletion and testing. The operatorship of the Chia Surkh PSC will also transfer from Genel to Petoil for the duration of the CS-12 well.

On completion, Genel will have a 40% participating interest in the Chia Surkh license, with Petoil at 40% and the KRG at 20%.

= Whiting's production in the third quarter 2015 totaled 14.8 million barrels of oil equivalent (MMBOE), 89% crude oil/natural gas liquids (NGLs). Third quarter 2015 production averaged 160,590 barrels of oil equivalent per day (BOE/d) after 8,700 BOE/d of Q2 2015 property sales. This represents a 38% increase over the third quarter 2014.

James J. Volker, Whiting's Chairman, President and CEO, commented:

'Our third quarter results demonstrate we remain on track to balance capital spending and cash flow in 2016 at approximately $1.0 billion while maintaining our longer term growth profile. Total capital expenditures decreased 46% from the second quarter while production adjusted for asset sales was relatively flat. We spent $266 million in our core Williston Basin Bakken/Three Forks and DJ Basin plays in the third quarter, largely before we dropped three rigs to reach our fourth quarter eight rig program. Non-operated spending and facilities spending during the quarter were $58 million and $32 million, respectively. As they decline during the fourth quarter, we anticipate total capex under $300 million.

'In addition, we expect production in the fourth quarter to benefit from the continuing transition to high volume, enhanced completions as evidenced by the outstanding results at our P Johnson pad, which tested an average rate per well of 5,224 BOE/d. The pad incorporated 7.0 million pounds of sand per completion versus our typical 5.0 million pound completion.'

ConocoPhillips Reports Biggest Loss Since 2008 on Oil Crash

ConocoPhillips reported its widest quarterly loss in more than six years as a crash in oil and natural gas prices tempered growth from Texas to Canada.

The largest major U.S. oil company without refining operations said it further reduced 2015 spending by $800 million for an anticipated total of $10.2 billion. ConocoPhillips lost $1.07 billion, or 87 cents a share in the third quarter, compared with a gain of $2.17 a share a year earlier, the Houston-based company said in a statement Thursday. It was the biggest loss since the fourth quarter of 2008.

The loss mirrored those of other major oil companies, including Royal Dutch Shell Plc, which reported a third-quarter net loss of $7.42 billion Thursday, the most in more than a decade. Exxon Mobil Corp. and Chevron Corp. report earnings Friday.

Chairman and Chief Executive Officer Ryan Lance has said ConocoPhillips will continue to support its dividend, which has a yield of about 5.6 percent and is among the highest for companies that explore for and produce oil and gas. Some analysts have questioned whether the company can continue to make those investor payments while funding new drilling and limiting spending to what it receives in cash from operations.

“That will be a challenge for them,” Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis, said in an interview before the earnings release. “Operationally, they’re doing well with what they can control, but they can’t control prices.”

ConocoPhillips is among producers that have turned to asset sales to help shore up their finances, pay dividends and continue drilling after oil fell by more than half and natural gas declined to the lowest level in more than three years.

Oil and gas production rose 5.5 percent to the equivalent of 1.55 million barrels a day. Excluding one-time items, the company lost 38 cents a share in the third quarter, in line with the 38-cent average of 21 analysts’ estimates compiled by Bloomberg.

China oil refiner Sinopec's net profit down 47.8 pct

China's Sinopec Corp, Asia's largest refiner, posted a 47.8 percent fall in net profits in the first nine months of the year, as oil prices fell.

The state-controlled company's net profit was 27.0 billion yuan ($4.25 billion), compared to 51.8 billion yuan a year earlier, it said in a filing with the Shanghai bourse.

The company plans to cut back operations at its refineries by around 5 percent in the fourth quarter compared with the first half of the year as fuel inventories rise and demand for diesel slows, industry sources told Reuters.

Operating profit at the exploration and production business reported an operating loss of 3.4 billion yuan, as crude oil production fell 2.4 percent, Sinopec said in the filing, without providing a production figure.

The refining business made an operating profit of 14.9 billion yuan, up 34.3 percent on year, while the marketing division had an operating profit of 21.5 billion yuan, down 18.7percent on year.

The chemicals division had a net operating profit of 15.0 billion yuan, compared to a loss of 18.5 billion yuan during the same period last year.

In 2014, Sinopec reported a worse than expected fourth-quarter net loss of 5.3 billion yuan - its first quarterly loss since becoming a public company in 2000.

PetroChina Profit Plunges to Record Low on Oil Price Rout

Net income dropped to 5.2 billion yuan ($818 million), or 0.03 yuan a share, from 27.9 billion yuan, or 0.15 yuan, a year earlier, the Beijing-based company said in a statement to the Shanghai Stock Exchange on Thursday. That compared with the 10.9 billion yuan average of four analyst estimates compiled by Bloomberg.

“It’s a pretty weak performance across all segments,” Neil Beveridge, an analyst at Sanford C. Bernstein & Co., said by phone from Hong Kong. “PetroChina is struggling in the low crude environment and needs to find a way to stop the bleeding.”

PetroChina relies on oil and gas production for most of its revenue, and the tumble in crude prices since last year has taken a toll on the explorer.

Sales dropped 29 percent to 427 billion yuan in the third quarter. The company’s realized crude price fell 49 percent to $51.16 a barrel in the first nine months, according to the statement, while oil and gas output rose 3.6 percent to 1.1 billion barrels of oil equivalent.

Total beats forecast, raises production target

French oil and gas company Total's net adjusted profit tumbled 23 percent to $2.756 billion in the third quarter compared with the same period a year ago, the firm said on Thursday, hit by a sharp fall in global oil prices.

The firm however revised its production growth target higher to more than 9 percent this year from 8 percent previously following a 10 percent jump in production in a third quarter boosted by new projects.

Analysts on average had expected $2.391 billion in net adjusted profit, according to Thomson Reuters I/B/E/S estimates.

"In a context where the oil price has fallen by 50 percent in one year, Total was able to demonstrate its resilience by limiting to 23 percent the decrease in its third quarter adjusted net income of $2.8 billion," Chief Executive Officer Patrick Pouyanne said in a statement.

Record-high margins in the European refining sector boosted profits at Total's downstream division, which were up 82 percent on the previous year in the third quarter.

Total said that it was on track to more than beat its target of $1.2 billion in cost reductions in 2015, while organic investments after nine months were $16.6 billion, in line with the objective of $23-24 billion for 2015.

Rival BP on Tuesday announced a third round of spending cuts and more asset sales over the coming years to tackle the extended period of low oil prices and help pay for its $54 billion U.S. oil spill settlement.

In the release announcing Suncor's third-quarter results late Wednesday, CEO Steve Williams said that if Suncor were able to increase its stake in the Syncrude oilsands mine, operations at the sprawling development north of Fort McMurray, Alta., would run more smoothly.

"We believe that we can drive real improvements in Syncrude's performance with a larger ownership interest," Williams said.

Oil producers like Suncor have been squeezed by persistent weakness in crude prices, which have fallen to around $43 a barrel — down 60 per cent from the high point of last year.

During the third quarter, oilsands cash operating costs per barrel decreased to $27 — the lowest Suncor has seen since 2007 — from $31.10 a year earlier.

Overall production rose to 566,100 barrels of oil equivalent per day from 519,300.

"We're delivering on the reliability targets and cost reduction measures we established, leading to the lowest cash operating cost per barrel for oilsands operations in eight years — the results clearly demonstrate the impact this discipline has on Suncor's performance."

Shell horror show.

Profit adjusted for one-time items and inventory changes dropped to $1.77billion from $5.85billion a year earlier. The firm’s upstream business bore the brunt of the financial dip.

Chief executive Ben van Burden said:“Shell’s integrated business and our performance drive are helping to mitigate the impact of low oil prices on the bottom line, in what is a difficult environment for the industry today.

“We continue to improve the operational performance of our assets, and production volumes are up. Costs are falling across the company and Shell’s performance drive is delivering at the bottom line.Our financial framework is highly competitive, with balance sheet gearing at 12.7%, similar to year ago levels, despite a halving of oil prices. Both net investments and dividends have been covered by operating cash flow over the last year, when oil prices have averaged $60 per barrel.

“While our cash flow and our operating performance in the quarter were strong, the headline numbers we’re reporting today include substantial charges. These charges reflect both a lower oil and gas price outlook and the firm steps we are taking to review and reduce Shell’s longer-term option set.

“We have halted exploration activities offshore Alaska, and stopped the construction of the Carmon Creek in-situ oil project in Canada.

“These are difficult, but impactful decisions. I am determined that Shell will become a more focused and competitive company as a result.”

The company leader confirmed its takeover of BG was still on track for 2016 target date. He said the deal would act as a “springboard to focus Shell into fewer and more profitable themes, especially deep water and integrated gas.”

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National Oilwell Varco’s third quarter results reflect downturn

National Oilwell Varco posted better than expected third quarter results, recording earnings of $155million, compared to $289million in the previous three-month period, whilst stating it expected to take advantage of investment opportunities in the continued downturn.

Revenues for the third quarter of 2015 were $3.31 billion, a decrease of 15% from the second quarter of 2015 and a decrease of 41% from the third quarter of 2014. Analysts had predicted lower revenue and earnings ahead of today’s results.

Chief executive Clay Williams, said: “The sharp decline in oil prices and activity since late last year has impacted each of our segments, and will drive activity lower in the fourth quarter.

We believe our strong financial resources will enable National Oilwell Varco to invest in the extraordinary opportunities that will arise from this downturn, and we expect to emerge with greater capability and efficiency.

“In the meantime, with limited visibility into the timing of a recovery, we remain focused on managing costs and improving performance, while continuing to develop technologies that help our customers to improve their returns in a lower commodity price world.”

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Marcellus Driller EdgeMarc Gets $300M from Ontario Teachers

EdgeMarc Energy is a small driller headquartered in the Pittsburgh area, formed in 2012.

The company has leased 50,000 acres in the Marcellus and Utica Shales. On Monday EdgeMarc issued a press release to announce they’ve attracted a new investor–the Ontario Teachers’ Pension Plan–which has promised the company up to $300 million in cash in return for part ownership (called an “equity commitment”).

The announcement also says EdgeMarc currently drills and produces natural gas in Monroe and Washington counties in Ohio, and Butler County in Pennsylvania.

In checking the latest issue of our 2015 Marcellus and Utica Shale Databook series, Volume 2, we find that EM Energy (which we assume is EdgeMarc) received permits to drill or continue work on 11 different wells in Butler County from May through August 2015.

Including an existing equity commitment from Goldman Sachs, EdgeMarc, a private company, has now sold off $750 million worth of the company to outside investors…

PPT The Next Big Thing In Enhanced Oil Recovery

Sleeping giant oilfields that were once thought mature and largely tapped out are getting a second lease on life with the latest in revolutionary enhanced oil technology: the futuristic-sounding Plasma Pulse Technology—a potentially billion-dollar business hitting the markets hard and backed by major investments.

Major strategic investors have been playing the enhanced oil recovery (EOR) market for some time, but a recent $15-million investment specifically in Propell Technologies Group, Inc. (OTCQB:PROP)’s Plasma Pulse Technology (PPT) gives us a glimpse of where this revolutionary tech is going.

The past few years have demonstrated that EOR is the savior of the North American oil boom, and the only thing that makes sense for producers who understand that operators have to be able to withstand price volatility.

Plasma Pulse Technology uses a series of impulse waves to reopen permeability for up to one year per treatment. Data from an average of 27 oil wells showed a 295% increase in initial production after a single PPT treatment, while an average from 36 injector wells showed a 545% increase of the amount of fluid after a single plasma treatment.

In an Oklahoma oil field, the application of PPT led to an amazing 1040% increase in daily well production—and that is just one of many successful plasma pulse case studies.

In addition to making wells more profitable, PPT enables the re-opening of wells without requiring water, without polluting chemicals, and without causing earthquakes. The technology doesn’t open rock like fracking; rather, it comes in afterwards and cleans up well bores to clear the pathway for oil to flow faster and more efficiently to the surface.

We’re looking at the immediate returns for this commercially proven method of getting more oil out of the ground, with the potential to double a well’s output by using PPT. This is exactly what investors today want to see from an operator, particularly in an atmosphere of depressed oil prices.

And the savings go far beyond the well. With anti-fracking sentiments at an all-time high, and new stringent regulations popping up, PPT offers a cheap and easy alternative.

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Summary of Weekly Petroleum Data for the Week Ending October 23, 2015

U.S. crude oil refinery inputs averaged over 15.6 million barrels per day during the week ending October 23, 2015, 271,000 barrels per day more than the previous week’s average. Refineries operated at 87.6% of their operable capacity last week. Gasoline production increased last week, averaging 9.7 million barrels per day. Distillate fuel production increased last week, averaging 4.9 million barrels per day.

U.S. crude oil imports averaged over 7.0 million barrels per day last week, down by 439,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.2 million barrels per day, 3.8% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 722,000 barrels per day. Distillate fuel imports averaged 108,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.4 million barrels from the previous week. At 480.0 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 1.1 million barrels last week, but are above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 3.0 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories remain unchanged last week and are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 3.7 million barrels last week.

Total products supplied over the last four-week period averaged over 19.5 million barrels per day, up by 1.0% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.1 million barrels per day, up by 3.4% from the same period last year. Distillate fuel product supplied averaged about 4.0 million barrels per day over the last four weeks, up by 10.0% from the same period last year. Jet fuel product supplied is up 1.9% compared to the same four-week period last year.

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US weekly oil production rises slightly

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Saipem plans 3.5 bln euro rights issue as Eni steps back

Italian oil contractor Saipem is asking investors to pump in fresh capital equivalent to its current market value to help it to weather the oil service recession and plot a path to recovery as main investor Eni takes a step back.

Saipem, which is 43 percent owned by Eni, said on Wednesday that it would hold a 3.5 billion euro ($3.87 billion)rights issue in the first quarter of next year as part of a new four-year turnaround plan aimed at ensuring the company's survival without its Eni safety net.

At the same time Eni said it had agreed to sell about 12.5 percent of its Saipem stake to state-owned investment fund Fondo Strategico Italiano (FSI). That deal, in conjunction with a shareholder pact with FSI, will see Eni relinquish its control and cut 5.1 billion euros of debt from its balance sheet.

State-controlled Eni, the A- credit rating of which had previously helped Saipem to service its debt, is looking to focus on its bread-and-butter business of finding oil and gas and is keen to get its subsidiary on a standalone footing.

Saipem, which has now been given a Baa3 investment grade rating by Moody's, said the 3.2 billion euros of gross debt remaining after the rights issue would be refinanced by new credit lines.

"We are ready to go it alone. I think there's always a good time in the history of a company for step change. This is certainly a major change," Saipem Chief Executive Stefano Cao told Reuters.

With margins and orders battered by low oil prices, Saipem needs a large capital injection to get the group back on its feet. It has issued two profit warnings in a little more than 30 months and in July announced cost cuts including 8,800 redundancies.

Saipem, which expects the market to recover in 2017, said it had expanded a previous cost savings target of 1.3 billion euros to 1.5 billion euros and is ready to dispose of non-core assets to lift its profit margins.

"The rights issue was good news, since it was bigger than expected, but it will only happen next year and that means dragging out the pain and suffering for another four months or so," he said.

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Occidental swings to quarterly loss on $2.6 bln in charges

Occidental Petroleum Corp, the fourth-largest U.S. oil producer, swung to a significant net loss for the third quarter on Wednesday as it booked charges for dropping futures prices and halted projects while saying it was exiting North Dakota.

The company, which also has operations in the Middle East and Colombia, showed a net loss of $2.61 billion, or $3.42 per share, in the third quarter ended Sept. 30, compared with a profit of $1.21 billion, or $1.55 per share, in the year-ago quarter.

The result reflects the tough times a more than 50 percent drop in crude prices over the last year has wrought on oil companies.

Charges it took "reflect the sharp decline in the oil and gas futures price curves, as well as projects that management determined it would cease to pursue," Occidental said in a statement.

On an adjusted basis, Occidental was able to beat expectations as it lifted output from a year earlier and slashed costs to offset tumbling prices.

Houston-based Occidental slashed its capital budget by $300 million in the quarter, and Chief Executive Steve Chazen said the company has "made a strategic decision to exit" the Bakken, which had drained resources away from Occidental's core Texan shale fields.

Reuters reported this month that Occidental had sold its North Dakota assets to private equity fund Lime Rock Resources. It was the most significant pullback by a big company from the Bakken fields of North Dakota since the downturn started.

Excluding one-time items, the company earned 3 cents per share.

By that measure, analysts expected a loss of a penny per share, according to Thomson Reuters I/B/E/S.

Average daily production rose 16 percent to 689,000 barrels of oil equivalent (BOE) from the year-ago quarter, even as the average price Occidental received for its oil fell 49 percent to $47.78 per barrel. It had started up its Al Hosn oil field in the United Arab Emirates, which produced 50,000 barrels a day in the third quarter, and its oil output in West Texas surged 72 percent to 74,000 barrels a day.

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Hess Slashes 2016 Drilling Budget 27 Percent on Oil Swoon

Hess Corp. plans to cut spending by about 27 percent next year after its oil and natural gas business lost more than $2 million a day during the third quarter.

Hess estimated its 2016 capital budget will fall to $2.9 billion to $3.1 billion from $4.1 billion this year, according to a statement from the New York-based company on Wednesday. Daily oil and gas output will decline to the equivalent of 330,000 barrels to 350,000 barrels next year, an 8.7 percent drop from the full-year 2015 target, based on the mid-range of those numbers.

The company posted a net loss of $279 million, or 98 cents a share, compared with profit of $1.01 billion, or $3.31, a year earlier, according to the statement. Excluding one-time items, the per-share loss was $1.03, beating the average estimated loss of $1.20 from analysts in a Bloomberg survey.

Hess’s exploration and production unit lost $188 million during the quarter as a 53 percent plunge in the price the company received for each barrel of crude more than offset a 19 percent jump in production. Even with hedges in place intended to help the company lock in prices for its output, its average selling prices for crude was $45.66 a barrel, compared with $96.78 a year earlier.

Valero pumps out strong profit as refining margins rise

Valero also raised its quarterly cash dividend to 50 cents per share from 40 cents.

The company's shares were up 2.4 percent at $63.99 in premarket trading on Wednesday.

Refiners have been pumping out strong profits due to high crack spreads, the difference between crude oil and prices of refined products, as crude prices have more than halved since June last year due to a supply glut.

Valero expects continued healthy gasoline demand in the fourth quarter, Chief Executive Joe Gorder said in a statement on Wednesday.

Gasoline demand is expected to remain buoyant, helped by lower prices, even after accounting for a seasonal winter downturn in the consumption of motor fuel.

Valero's refining margin rose to $14.38 per barrel in the third quarter ended Sept. 30, from $11.81 per barrel a year earlier.

Net income from continuing operations attributable to Valero's stockholders rose 30 percent to $1.38 billion, or $2.79 per share.

Analysts on average had expected earnings of $2.66 per share, according to Thomson Reuters I/B/E/S.

Engie said it has executed a 5-year deal with Cheniere

France’s Engie said it has executed a 5-year deal with US LNG player Cheniere to buy up to 12 LNG cargoes per annum.

According to the agreement, the cargoes will be delivered ex-ship at the Montoir-de-Bretagne regasification terminal in France from Cheniere’s Corpus Christi and Sabine Pass LNG export plants currently under construction in Texas.

The sales price for the LNG cargoes is linked to Northern European indexes. The deliveries will start in 2018, Engie said on Wednesday.

The US LNG can alternatively be shipped to other European terminals, the French company added.

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Iran total oil loading hits 7-month low in Oct -shipping source

Iran's exports of crude oil and condensate dropped to a seven-month low this month, hit by refinery maintenance and a lull in demand ahead of winter, according to an industry source with knowledge of the nation's tanker loading schedule.

Still, loadings of the light oil condensate grade were robust - the second highest for the year - due to Iran's attractive pricing relative to other producers, the source said.

Iran this month exported 1.07 million barrels per day (bpd) of crude and condensate, down 13 percent from revised figures in September and the lowest since March, when India and Japan took no oil to stay within sanction limits, said the source who keeps a close watch on the producer's shipping programme.

Asia's Iranian crude oil imports for the last two years have dipped in October, however, before recovering due to seasonal winter demand, and some industry sources said Chinese loadings are likely to rebound again in the coming months.

Iran's exports of condensate, a by-product of natural gas output, in October totalled 240,000 bpd, the second-highest this year and down 10 percent from top-month September.

Industry sources attributed the recent high condensate shipments in part to Unipec - the trading arm of Chinese state giant Sinopec - resuming its purchases after laying off the light oil for several months, taking about 1 million barrels each month in September and October.

Regional grades such as Australia's North West Shelf condensate have also become more expensive and Iranian supply more competitive, industry sources said.

"Iranian condensate is very cheap and we have been paying close attention," said a source with a North Asian buyer of condensate from Iran's South Pars gas fields.

To counter competing condensate from Qatar, among others, Iran has offered discounts to retain market share after its crude exports have more than halved from 2.5 million bpd in 2011, sources said.

Officials at state-owned National Iranian Oil Company did not immediately respond to an emailed request for comment.

Iranian crude and condensate loadings by Tehran's main customers - China, India, Japan and South Korea - declined for a third straight month to around 850,000 bpd in October, down 12 percent from September.

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Pemex imports 75kbpd per day of light crude.

Oct 28 (Reuters) - State oil firm Pemex said on Wednesday it had received a license from the United States to import U.S. light crude in exchange for exports of Mexico's heavier crude oil for the first time, albeit with a lower ceiling than originally planned.

The terms of the year-long license will allow Pemex's commercial arm, P.M.I. Comercio Internacional, to import U.S. light crude to process in its refineries from October, with the limit capped at 75,000 barrels per day (bpd).

Pemex will initially receive conventional U.S. light crudes as part of the swap and later shipments could carry shale crudes as well.

A Pemex spokesman said the decision to cut the original plan to import up to 100,000 barrels per day was made in accordance with the company's present needs at its refineries.

The first U.S. shipment would arrive in Mexico from the first half of November, he said.

"The permit is for 75,000 (bpd) because that's what we asked for," he said. "They gave us permission for 75,000 (bpd) for one year, but when that year ends, we can ask for more or less, whatever we need."

CNOOC Limited Announces Key Operational Statistics for Q3 2015

In the third quarter, the Company achieved a total net production of 127.5 million barrels of oil equivalent (BOE), representing a significant increase of 23.8% year over year (yoy). Net production from offshore China reached 83.3 million BOE, a 28.2% yoy increase, primarily due to the production contribution from newly commenced projects in Bohai and the Eastern South China Sea. Meanwhile, net production from overseas rose 16.5% yoy to 44.3 million BOE, mainly because of maintenance at the Buzzard oilfield during the same period last year and new production from the Golden Eagle project in the U.K. North Sea.

CNOOC Ltd said its third-quarter unaudited sales revenue from oil and gas fell 32.3 percent on low oil prices as its average realized oil price declined by 51 percent to $48.84 a barrel.

The company reported sales of 36.25 billion yuan ($5.70 billion) for the third quarter, compared with 53.57 billion a year earlier, according to a filing with the Hong Kong bourse. The state-controlled firm does not publish quarterly earnings.

The company said its capital expenditure fell 44.0 percent on year to roughly 14.75 billion yuan ($2.32 billion) amid belt-tightening.

During the period, the Company made 3 new discoveries and drilled fourteen successful appraisal wells in offshore China . The Caofeidian 6-4 structure was successfully appraised and proved to be a mid-sized oilfield, which represents a significant breakthrough after several years of oil and gas exploration in western Bohai. The new discovery of Liuhua 21-2 further demonstrated the exploration potential of Baiyun Sag in Pearl River Mouth basin and is expected to be developed jointly with adjacent oil structures in the area, including Liuhua 20-2. In the third quarter, the Luda 10-1 oilfield comprehensive adjustment project commenced production, while other projects progressed smoothly.

In the third quarter, the unaudited oil and gas sales revenue of the Company reached approximately RMB36.25 billion , representing a decline of 32.3% yoy. The Company's average realized oil price declined by 50.7% yoy to US$48.84 per barrel, while the average realized natural gas price declined by 3.0% yoy to US$6.41 per thousand cubic feet.

Facing a low oil price environment, the Company continued to lower costs and enhance efficiency, in addition to decreasing its full-year capital expenditures. During the period, the Company reduced its capital expenditures by 44.0% yoy to approximately RMB14.75 billion .

Mr. Li Fanrong , CEO of the Company commented, "In the third quarter, the Company made smooth progress in overall business, including exploration, development and production. Our cost controls and enhanced efficiency measures were executed effectively and achieved remarkable results as we aimed to proactively respond to the impact of low oil prices. Meanwhile, we are confident that we will achieve our production and operation targets for the year."

Nabors posts $296 million loss amid weakening oil field activity

Nabors Industries posted a $296 million loss in the third quarter amid a slowdown in the oil patch that has dried up demand for its services in the United States and abroad.

The company, which provides drilling and rig services across the globe, said it does not expect oil field activity to significantly rebound soon and will continue slashing costs to meet its minimum goal of breakeven free cash flow.

“We remain committed to emerge from this cycle a stronger and even more financially sound drilling company,” William Restrepo, Nabors’ chief financial officer, said in a statement.

The company’s loss of $1.02 per share in the the three-month period ending Sept. 30 was down from a profit of $106 million, or 36 cents per share, during the same time last year.

Its third quarter earnings included $251 million in pre-tax charges, largely due to its stake in C&J Energy Services, but also related to other small asset impairments and severance costs.

Nabors, which is based in Bermuda but has main offices in Houston, saw an uptick in its international operating revenues from the prior quarter, and expects to end the year with better international results than it did last year, but income still slipped 11 percent. As several international programs start to wind down, Nabors predicts further declines.

Weakening North American activity continues to hammer the company’s finances, the company said. Nabors operated 14 percent fewer rigs in the third quarter and saw income plunge by $45.5 million from the prior quarter.

The company has indefinitely delayed commencement of the full operating day rate for its newest platform rig in the Gulf of Mexico because of problems with the installation of the customer’s platform, Nabors said. It did not elaborate.

Oil at $60 Is the Magic Number for BP in Prolonged Downturn

For Europe’s biggest oil companies, $60 is the magic number.

BP Plc, one of the first companies to predict a prolonged price downturn, has “reset” its business to generate surplus cash flow with oil at about $60 a barrel by 2017. It joins Total SA, which last month unveiled investment cutbacks and project delays that will enable it to fund dividend payouts in the same circumstances without the need to borrow.

A year after oil sank into a bear market, the industry is preparing for an extended downturn, with drillers slashing investments in exploration and production by a record 20 percent this year, according to International Energy Agency. With third-quarter earnings season barely under way, producers in the U.S. have already written down the value of their assets by $6.5 billion. BP’s Chief Financial Officer Brian Gilvary doesn’t expect a recovery in prices until late 2016.

“For the next nine months, I can’t see any up move,” Gilvary said in an interview Tuesday. “We’re in the process of resetting the company. Fortunately, we had a sense that the oil price is going to go low sooner than most people anticipated.”

BP, Europe’s third-largest oil company, said Tuesday it will cut capital spending to about $19 billion this year after investing roughly $23 billion in 2014. Annual spending will remain curtailed at $17 billion to $19 billion to 2017, the company said as it reported a 40 percent drop in third-quarter profit.

Total, Europe’s No. 2, has similar plans, trimming investment to $20 billion to $21 billion in 2016 from as much as $24 billion this year, the company said at its annual strategy update last month. Like BP, it plans annual capital spending of $17 billion to $19 billion in 2017, down from a previous target of $20 billion.

In the first nine months of this year, with Brent crude averaging about $56, BP’s cash flow from operations and asset sales totaled $16.9 billion, not enough to cover $18.5 billion in capital expenditure and dividend payouts, according to the company. If oil recovers to around $60 in two years, the companies say they will have sufficient cash flow to maintain payouts to shareholders while still investing in new projects for the future.

Statoil Deepens Spending Cuts as Profit Tumbles on Oil Slump

The Stavanger-based company cut planned investments in 2015 by $1 billion to $16.5 billion and pushed production start of its Aasta Hansteen and Mariner fields to the second half of 2018 from 2017, it said Wednesday in its quarterly earnings report.

Adjusted net income, which excludes financial and other items, fell to 3.7 billion kroner ($436 million) from 9.1 billion kroner a year earlier, missing a 5.1 billion-krone estimate in a Bloomberg poll of analysts. The company reported a net loss of 2.8 billion kroner after booking net impairment charges of 4.8 billion kroner.

"We continue to reduce underlying operational costs and deliver a quarter with strong operational performance and solid results from marketing and trading,” Eldar Saetre, Statoil’s chief executive officer, said in a statement. “In the third quarter, our financial results continued to be affected by low liquids prices.”

Statoil, 67 percent owned by the Norwegian government, is cutting investments and costs alongside competitors such as Royal Dutch Shell Plc and BP Plc. The world’s biggest oil companies are seeking to shield shareholder payouts after oil prices fell as low as $42 a barrel in August from highs of about $115 in June, 2014.

Statoil’s production rose to 1.91 million barrels of oil equivalent in the third quarter from 1.83 million barrels a year earlier. That beat a 1.9 million barrel a day estimate in a survey of 31 analysts conducted by Statoil. The company now expects production growth in 2015 to exceed 3 percent, compared to a previous forecast of about 2 percent.

A reduction in maintenance to save costs has boosted oil and gas production for Norway as a whole this year.

Adjusted earning for marketing, midstream and processing unit rose 39 percent to 6 billion kroner in the quarter. Lower oil prices have made refining more profitable.

Statoil is cutting capital expenditure from $20 billion in 2014 as it shields shareholders payouts. The company said it will pay a dividend of 22 cents a share for the third quarter, in line with its July forecast.

Anadarko Petroleum posts loss as crude prices slump

U.S. oil and natural gas company Anadarko Petroleum Corp reported a quarterly loss that met Wall Street expectations compared with a year-earlier profit as results were hurt by a slump in crude prices.

Anadarko, like other oil companies faced with a more than 50-percent decline in crude, is working to improve drilling efficiency and productivity while keeping a close eye on costs, Chief Executive Officer Al Walker said in a news release.

The Houston-based company reported a third-quarter net loss of $2.24 billion, or $4.41 per share, for the third quarter ended Sept. 30. A year earlier, Anadarko had a profit of $1.09 billion, or $2.12 per share.

Excluding one-time items, Anadarko had a per-share loss of 72 cents per share, a figure that was in line with Wall Street's expectations for a loss of 73 cents per share, according to Thomson Reuters I/B/E/S.

In the third quarter, the company's total sales volumes of oil and gas averaged 787,000 barrels oil equivalent per day, down from 849,000 boepd in the year-ago period.

Anadarko said it has so reached deals to shed $2 billion in assets this year, sales that have affected output.

Shell halts construction on new Alberta oil sands project

Royal Dutch Shell Plc will not continue construction of its 80,000 barrel per day Carmon Creek thermal oil sands project in northern Alberta because of the lack of infrastructure to move Canadian crude to market, the company said on Tuesday.

Shell said the decision to halt the project was also the result of "current uncertainties" and chief executive Ben van Beurden said the company was having to manage costs in today's low oil price environment.

"We are making changes to Shell's portfolio mix by reviewing our longer-term upstream options world-wide, and managing affordability and exposure in the current world of lower oil prices. This is forcing tough choices at Shell," van Beurden said in a statement.

Canada's oil sands hold the world's third largest crude reserves but carry some of the highest project breakeven costs globally. Western Canada also struggles with market access issues due to limited export pipelines, which can lead to a glut of crude building up in Alberta and weighing on prices.

The plunge in benchmark oil prices has prompted a number of companies to defer costly new oil sands projects, although so far few have been cancelled outright once underway.

Shell originally sanctioned the Carmon Creek in October 2013 but said in March that it would be delayed by two years as the company retendered some contracts and adjusted the design to take advantage of lower costs during the market downturn.

On Tuesday the company said following a review of potential design options, updated costs, and capital priorities, it had decided the project did not rank in its portfolio at this time.

Shell, which owns 100 percent of Carmon Creek, will retain the leases and preserve some equipment while continuing to study options for the project.

The company expects to take net impairment, contract provision, and redundancy and restructuring charges of around C$2 billion ($1.51 billion) as a result of the decision.

Last month Shell also pulled the plug on its plans to drill for oil in the Arctic, citing high costs and disappointing well results and in February shelved plans for its 200,000 bpd Pierre River oil sands mining project.

Ecopetrol announces decision to take over operation of Rubiales field

Ecopetrol S.A. hereby reports that, as decided by its Board of Directors, Ecopetrol will take over the operation of the Rubiales field following the conclusion of the Rubiales risk participation and Piriri joint venture contracts on June 30, 2016. These joint venture contracts were signed with Metapetroleum, an affiliate of Pacific Exploration & Production Corp.

The Company congratulates Pacific for the work it has done on the Rubiales field, which made it possible to convert this field into one of the most important in Colombia and the Americas.

Ecopetrol and Pacific will continue to jointly undertake activities and initiatives with the goal of optimizing operations, infrastructure and social responsibility endeavors in the production areas of Llanos Orientales.

Furthermore, they affirm their interest in building synergies to carry forward future projects that will generate value for the benefit of the two companies and for all Colombians.

Apache Corporation Is Built to Thrive at $50 Oil

A lot of oil companies are struggling with the price of crude stubbornly stuck below $50 a barrel. Their struggles are largely due to two factors: They have too much debt and their costs are too high. However, neither is a problem at Apache Corporation, which has reduced both substantially over the past year. As a result, the company is poised to thrive even if oil stays in its current range.

Over the past year, Apache has repositioned its portfolio to focus its attention on three core areas. It has sold a number of assets, including its deepwater assets in the Gulf of Mexico to Freeport McMoRan, its LNG assets, and a number of its international assets. Those sales brought in $10 billion in cash since the start of last year, which it used to pay down debt. It's reduced net debt by 28% just since the end of the first quarter of this year:

Not only has the company substantially reduced its outstanding debt, but it also has a tremendous amount of liquidity, with $2 billion in cash on its balance sheet to go along with $3.5 billion available on its credit facility. That gives the company ample cash to operate in the currently tough environment.

Now, contrast that with Freeport-McMoRan, which has been burdened by weak oil prices, as well as weakness in its mining operations. Because of this price weakness, Freeport expects to produce only $3.3 million in operating cash flow this year, which isn't nearly enough to cover the company's $6.3 billion in planned capex spending. With more than $20 billion in debt already on the books, and a troubling 3.9 debt-to-EBITDA ratio, the company can't really afford to bridge the gap between cash flow and capex with debt. This situation is forcing Freeport to look for other alternatives, including the potential sale of a stake in its oil and gas business to bring in some much-needed cash.

Freeport-McMoRan is far from the only company struggling to bridge a growing gap between its cash flow and capex. However, it's a struggle we don't see at Apache. It can easily grow its production by the low single digits even while staying within the cash flow its oil and gas production has generated. In other words, that $2 billion in cash on its balance sheet is a real cushion that the company would need only in an emergency situation. It's an emergency stash that Freeport-McMoRan and many of its other peers would really love to have in the current environment.

That Apache has such strong cash flow is largely a result of the abundant cash flow from the international assets it held onto, in Egypt and the U.K. North Sea, even at a low oil price. Further, its legacy North American assets are low-decline plays, which don't require much capital to maintain production. Also helping the company is that it jettisoned cash-consuming projects, such as the Gulf of Mexico assets it sold to Freeport-McMoRan and its stakes in LNG projects. Because of this strategic shift, the company has a lot of cash flow to reinvest elsewhere, which is primarily going toward drilling North American shale wells that start generating their own cash flow really quickly.

The other important factor here is that the company has captured strong cost reductions, with its North American well costs and G&A cash costs both down 25% year over year, while its lease operating expense per barrel of oil equivalent is down 13% over that same time frame. All of its key plays thus have economic drilling opportunities at sub-$50 oil. This combination of lower capital requirements and strong economic drilling opportunities are the key to Apache's ability to live within its cash flow next year, while still being able to deliver modest production growth even if oil prices remain weak.

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Turkey's Botas seeks arbitration over Russian gas deal

Turkish pipeline operator Botas said on Tuesday it would take Russia's Gazprom to international arbitration over a price discount it said it was promised on imports of Russian natural gas.

Russia has looked to bolster gas ties with Turkey after the European Union rejected its proposed South Stream pipeline to Bulgaria but political relations have soured over Moscow's military involvement in Syria.

Turkey announced a deal in February under which it was to receive a 10.25 percent price discount on gas from Gazprom but a final deal has proved elusive and state-run Botas said it had appealed to the International Chamber of Commerce (ICC).

Botas said it notified Russia's Gazprom on Monday that the arbitration would aim to cover the price of Russian natural gas purchased since the start of the year.

A spokesman for Gazprom said: "The possibility of an out-of-court settlement as well as an arbitration decision still remains."

"Gazprom has failed to sign the amendments regarding the agreement on price discount between the two companies," Botas said in a statement. It said it had written a final letter to Gazprom calling on it to sign the deal.

Turkish energy officials have said Russia has added preconditions for finalising the gas deal linked to its planned TurkStream gas pipeline.

Turkey imports 60 percent of its gas and 35 percent of its oil from Russia. Russians also make up a growing proportion of Turkey's tourist traffic, key for financing the country's current account deficit.

But political relations have soured since Russia began air strikes in Syria in support of President Bashar al-Assad, whose removal from power has long been advocated by Turkish President Tayyip Erdogan.

Gazprom said this month it had decided to halve the planned capacity of TurkStream to 32 billion cubic metres of gas per annum and delay its launch, in further evidence of strained relations.

Despite third-quarter profit, low prices weigh on Consol Energy

Cuts to retiree benefits and an asset sale brought Consol Energy Inc. into a profit for the third quarter 2015.

The Cecil-based oil and gas, and coal company reported income of $119 million, or 52 cents per share, during the past three months, compared to a loss of $1.6 million, or 1 cent per share, a year ago.

Revenue was $814 million, down from $885 million in the third quarter of 2014.

Falling natural gas prices continued to hammer the company, resulting in a 28 cent loss for every thousand cubic feet of gas it produced during the quarter.

Coal prices followed a similar trajectory, but Consol reported a margin of about $15 for each ton of Pennsylvania coal it sold during the third quarter. At Buchanan, its Virginia metallurgical coal mine, however, costs exceeded the sales price by $2 per ton.

Saudi Stocks Tumble as Government Studies Cutting Fuel Subsidies

Saudi Arabian government said it’s considering an increase in domestic energy prices.

OPEC’s biggest producer is studying whether to raise domestic energy prices in order to cope with the decline in oil prices, Reuters reported, citing Ali Al-Naimi, the kingdom’s oil minister. The country drained 11 percent of its foreign reserves in the year to August, started selling debt and is curbing domestic investment to cope with a more than 40 percent decline in Brent crude prices in the past 12 months. The Tadawul is poised for the worst year since 2008.

"Reports that Saudi Arabia may reduce oil subsidies caused panic among investors because the cost of doing business will rise," said Tariq Qaqish, the head of asset management at Dubai-based Al Mal Capital PSC, which is seeking opportunities to buy Saudi stocks if prices fall further.

"Raising government revenues in a weak oil-price environment is a trend emerging throughout the region," said Riyadh-based Muhammad Faisal Potrik, the head of research at Riyad Capital. "Reducing or eliminating subsidies for industries such as petrochemical producers and cement for example can have a very direct negative impact on corporate profits.”

Saudi Yasref Oil Plant Running at Capacity as Margins Improve

Yasref oil refinery, a joint venture between Saudi Arabian Oil Co. and China Petroleum & Chemical Corp., is processing crude at full capacity of 400,000 barrels a day amid improving refining margins for the plant, its chief executive officer said.

The facility on Saudi Arabia’s Red Sea coast reached its output limits in July and currently produces 265,000 barrels a day of low-sulfur diesel and 91,000 barrels a day of 91-octane and 95-octane gasoline, Mohammad Alshammari said at a conference in Riyadh. Yasref’s refining margins have improved since August even as the global industry faces a significant capacity surplus, he said.

“I think we suffered back in August quite a dip in refining margin, but now we see them turning around,” Alshammari said in an interview later in the day. “Last month, we averaged much much better than August, and this month the numbers are much better. It’s still a tight-margin market.”

Yasref’s main international markets are Europe, Asia and Egypt, Alshammari said.

“Our target market for diesel is mainly Europe because we produce ultra-low-sulfur diesel that’s the cleanest diesel you can get,” he said. The plant’s output may put pressure on refining margins in Europe but probably not in Asia, he said.

Kazakhs Said to Weigh $2 Billion Penalty on BG, Eni Project

Kazakhstan’s government is considering levying a penalty on a venture led by BG Group Plc and Eni SpA that operates the nation’s second-biggest producing oil and gas field as the state seeks extra revenue to bolster its finances, according to two people familiar with the plan.

The fine on the Karachaganak project could be as much as $2 billion, one of the people said. That would be roughly in line with penalties the government threatened to impose in a 2010 dispute that ended with the state taking a 10 percent stake in the project.

The Central Asia nation is studying the possibility of imposing the fine because the companies haven’t fulfilled certain contractual obligations, the people said, asking not to be identified because the matter isn’t public. The penalty may be a precursor to the government increasing its stake in Karachaganak, they said.

Kazakhstan, which depends on energy products for about three quarters of its exports, needs additional funds to balance its budget after the collapse in crude oil reduced state revenue and weakened the currency by about 45 percent against the dollar since the beginning of last year. The government of President Nursultan Nazarbayev has in the past forced its oil company KazMunaiGaz National Co. into projects to increase state control over operations.

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U.S. to sell 58 mln barrels from strategic oil reserve - but not yet

The United States plans to sell 58 million barrels of crude oil from its strategic petroleum reserve between 2018 and 2025 under a budget deal reached on Monday by the White House and top lawmakers from both parties, Bloomberg reported.

The proposed sale represents more than 8 percent of the 695 million barrels of reserves, held in four sites along the Gulf of Mexico coast, the report said.

International Paper creates virtual pipeline

Last year International Paper’s Ticonderoga mill in northern New York, near the Vermont border, received $1.75 million in grant money from Andrew Cuomo and New York State (that is to say, from we the taxpayers) to help with an $11 million project to convert the plant from using oil to using natural gas (see the Albany Times Unionstory: $100M in upgrades at International Paper mill in Ticonderoga follows state deal for aid, cheap power). Kind of ironic that Andy was willing to give big money to an evil corporation to use more natural gas because he banned the extraction of fracked natural gas in NY later that same year. However, the plant was threatening to close. It’s the biggest employer in the area representing 600 jobs. Because of Cuomo’s $1.75M grant, the plant stayed open and converted to natgas, but that means it needs a lot of natgas on a regular basis. International Paper had planned to build a pipeline from Vermont to feed the plant as a permanent solution. In the meantime, it was using a “virtual pipeline” of a constant stream of trucks delivering compressed natural gas (CNG) from NG Advantage (subsidiary of Clean Energy Fuels Corp.), trucking CNG to the plant 24/7. International liked the CNG operation so much, and disliked the regulatory hassles of building the pipeline so much, they’ve decided to keep the virtual pipeline over a real one as a permanent solution…

Oil cargoes bought for state reserve stranded at China port - sources

About 4 million barrels of crude oil bought by a Chinese state trader for the country's strategic reserves have been stranded in two tankers off an eastern port for nearly two months due to a lack of storage, two trade sources said.

The delays will cost millions of dollars and indicate how China is struggling to import record amounts of crude if storage and port capacity at Qingdao, its largest oil import terminal, are unable to keep pace.

Ocean Lily and Plata Glory, two very large crude carriers (VLCCs) carrying oil for Sinochem Corp, arrived at Huangdao, Qingdao's main oil terminal, in early September, and both were still at anchor this week, waiting to unload, according to Reuters' shipping data, and trade and port sources.

"They are both for SPR (strategic petroleum reserve), but no tank space is available to take that oil in," said a senior trader familiar with Sinochem's oil trading.

China's crude oil imports rose nearly 9 percent in the first nine months of the year over a year earlier to 6.65 million bpd, driven partly by reserve building.

China said late last year the first phase of the government's emergency stockpile is storing about 90 million barrels of crude oil, with the construction of a second phase due by 2020, partly through private investment.

Huangdao is the site of one of China's first SPR tanks, with space for 20 million barrels of oil and also has plans for a second phase of similar size.

A recent move to increase competition for oil imports by granting quotas to independent refineries has added to congestion at Huangdao, where operations were already hampered following a pipeline accident two years ago.

"Storage and berths were not ready for such a quick market opening," the trader said.

Huangdao has experienced cargo congestion since a pipeline explosion that killed 66 people two years ago, with tighter security checks and repairs to old and damaged pipelines slowing tanker unloading.

Congestion has worsened following a scramble by a raft of new crude buyers to bring in oil, trading sources have said.

Since July, China has granted a total of nearly 1 million barrels per day (bpd) of crude import quotas to a dozen independent refineries in an effort to boost competition and private investment.

The pace of the reform has been much quicker than the market expected, with the newly approved quotas making up more than 10 percent of China's current total imports.

Broker reports show that Sinochem owns Ocean Lily, while Plata Glory was fixed on a six-month charter at around $37,750 a day in April, with an option to extend for another six months, putting the cost of keeping the two vessels idle at several million dollars.

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BG chief: LNG demand to rise up to 6% through 2020

Global demand for liquefied natural gas is likely to grow strongly over the long term, according to the head of U.K.-based gas and oil company BG Group (BG.LN), despite the recent slump in prices in regions such as Asia.

"There should be no doubt LNG will have an increasingly influential role in the changing landscape of global energy supply," said Helge Lund, BG chief executive at an energy conference in Singapore, on Tuesday.

Liquefied natural gas prices have been dealt a severe blow this year as demand in key importing countries such as China has moderated. Robust supply growth and competitive coal pricing have also put gas prices under pressure.

The benchmark U.S. natural-gas price tumbled to its biggest one-day percentage drop overnight since February 2014 on expectations of a deepening supply glut.

Crestwood to Launch Open Season for Delta Crude Pipeline Later This Week

Crestwood Midstream's DELTA pipeline project will launch a non-binding open season later this week, seeking commitments for crude and condensate flows starting at the company's proposed Orla terminal in the Delaware Basin, Senior Vice President Brian Freed said Monday at Hart Energy's Midstream Texas conference.

The pipeline would carry 200,000 b/d of crude and condensate from the gathering facility in Orla, Texas, to takeaway pipelines as far away as Midland and McCamey, Texas. Depending on the pipeline connections the company can secure, the crude and condensate could then make its way to export and refining markets near Houston or Corpus Christi, Texas.

The Orla terminal will be able to stabilize 75,000 b/d of condensate, and the DELTA pipeline will be batched, which means condensate processed at the terminal could make its way to coastal export markets without losing its export-eligible status by mixing with unprocessed crude.

The Orla terminal will have 200,000 barrels of crude and condensate storage capacity and a truck facility capable of handing 64,000 b/d, along with access to the company's RIGS gathering system.

The company is able to work on the project despite the downturn in oil prices because it is located in an active part of Texas' Delaware Basin, Freed said.

"The devil is in the details, and you've got to look at things on a localized basis," he said. "Sub $60/b works in some areas and doesn't in others."

Even beyond that, Christopher Keene, the CEO of Rangeland Energy II, which is also building midstream infrastructure in the Permian Basin said he does not think the market is going to remain low forever.

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Oil flows east, leaving an Oklahoma pipeline unusually empty

A pipeline to America’s largest crude-oil hub is about to find itself in an unfamiliar position: not full.

One of the main pipelines that carries crude to Cushing, Oklahoma, will run at less than capacity in December for the first time in nearly two and a half years. The drop in supply coincides with the opening of a pipeline to Quebec, giving shippers the option of diverting some oil from the middle of the U.S.

“There will be less light sweet crude available to make its way to Cushing,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “There’s going to be some significant rebalancing of where oil flows in North America.”

Shippers on Enbridge Inc.’s Spearhead pipeline only asked to transport about 155,000 barrels of crude a day in December, below the system’s capacity to move about 193,000 to Cushing from Flanagan, Illinois. It’s the first time shippers haven’t filled the line since August 2013. Some months shippers request 10 times more space than is available.

The drop in Spearhead interest comes as Enbridge plans to start another pipeline carrying 300,000 barrels of crude a day from the Midwest to Montreal by the end of 2015. Suncor Energy Inc. and Valero Energy Corp. have said they plan to use the line to supply refineries in Quebec with crude from Western Canada and the U.S. Midwest.

Crude in eastern Canada competes with the global benchmark, Brent, which is priced a few dollars higher than West Texas Intermediate in Cushing.

Enbridge next month will also start filling its Southern Access pipeline, which carries crude within Illinois from Flanagan to Patoka, according to a U.S. regulatory filing. The company expects to put the 168-mile-long spur in service in December.

BP’s downstream boosts offset by upstream losses

Oil major BP’s cost profit in the third quarter of the year has more than halved since the same period in 2014.

The company, which announced its third quarter results today, said it had made a profit of $0.8billion, compared with $3.9billion this time last year.

BP reported underlying replacement cost profit of $1.8 billion for the quarter, compared with $1.3 billion for the previous quarter and $3.0 billion for the third quarter of 2014. Compared with a year earlier, the result primarily showed the impact of sharply lower oil and gas prices but also the benefits of a continuing strong downstream environment and performance and steadily lower cash costs throughout the Group.

The lower results, BP said, were primarily due to the effect of lower oil and gas prices.

In its downstream business the operator continued to see a strong performance which saw an increase in profit from $1.5billion last year to $2.3billion.

Strong refining operation and fuels marketing and cost benefit simplification was said to have boosted the area of the business.

Income from other sources including Rosneft for the quarter have also increased from $110million in the third quarter last year to $383million.

BP said the company has almost completed its current divestment programme which is expected to approach $10billion by the end of 2015.

A further $3-5billion in divestments are expected next year, before returning back to a rate if around $2-3billion a year thereafter.

The company’s chief executive Bob Dudley is set to brief investors today on the oil major’s results.

He said staff were working hard to rebalance their books at $50 oil.

Dudley said: “Last year, we acted decisively to reset BP for a sustained period of lower oil prices and the results are coming through well. We are now in action to rebalance our financial framework in this new price environment.

“And I am confident that BP’s strong and well-balanced portfolio of businesses and projects gives us the ability to grow value into the future. All of this underpins our strong priority of sustaining our dividend and then growing free cash flow and shareholder distributions over the long term.

“BP has successfully adapted to changing circumstances many times in its history and, in a hard time for the entire industry, I believe we will once again successfully take on today’s challenges. We are already in action, with a quality portfolio and clear plans for the future, underpinned by enduring principles. I am confident BP will continue to deliver value into the years and decades ahead.”

BP’s operating cash flow for the third quarter was $5.2billion, bringing the total for the first nine months of the year to $13.3billion.

Organic capital expenditure over the nine month period was $13.2billion.

Net debt was $25.6billion, representing a gearing level of 20%, including 1% arising from the agreements in principle, BP said, to settle with the US government and Gulf states over the 2010 Deepwater Horizon oil spill.

In July the company said it had reached, in principle, an agreement to settle all outstanding federal and state claims arising from the incident.

It included payments of up to $18.7billion over a period of 18 years.

A hearing is set for March 2016 to consider final approval.

BP said it also entered into an agreement with five Gulf states and has accepted releases received from the vast majority of local government entities and payments required under those releases were made during the third quarter.

A charge of $426million for the incident was also taken in the third quarter, bringing the total pre-tax charge to $55billion.

During the quarter BP was awarded five new blocks in the UK North Sea.

In October it was announced that, subject to government approval, BP was also awarded three shallow water blocks in the Mediterranean Sea off Egypt.

The Woodside-operated Western Flank A project offshore Western Australia, the latest phase of the North West Shelf development, began production in October.

Capital expenditure from now until 2017 is expected to be between $17-19billion.

Last year, expectations for capital expenditure were $24-26billion while they were estimated at just under $20billion in the second quarter of this year.

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Santos Gets $1.1 Billion Offer for Australian Gas Fields

Santos Ltd., which last week rejected a $5.2 billion takeover offer, has received a binding bid from Quadrant Energy Pty for Australian oil and gas fields the companies jointly own, people with knowledge of the matter said.

Santos is considering the offer of about A$1.5 billion ($1.1 billion) for its stakes in the fields in Western Australia state as part of a broader review of its assets, according to the people. Japanese trading house Marubeni Corp. is separately in talks to buy 3.6 percent of Exxon Mobil Corp.’s Papua New Guinea liquefied natural gas plant from Santos for more than A$1 billion, the people said, asking not to be identified as the details are private.

The Australian energy producer is speaking to a number of parties about different sets of assets, according to the people. Santos hasn’t made a final decision on which parts of its portfolio to sell or whether it needs to raise equity in addition to the divestments, the people said.

Santos said in August it’s considering strategic options and that Chief Executive Officer David Knox will step down as the rout in commodity prices triggered concerns that the company has too much debt. The company last week rejected a A$6.88-per-share takeover offer from Scepter Partners, an investment firm backed by Asian and Middle Eastern royalty, saying it was too low and “opportunistic.”

Santos’s Western Australian assets, located in the Carnarvon Basin, accounted for 24 percent of its production last year, according to the company’s website. It owns 45 percent of the Reindeer, John Brookes and Spar gas fields there, while Quadrant owns the rest and is the operator. Santos also owns 37.5 percent of the Fletcher Finucane oil field in the region and is the operator.

Perth-based Quadrant Energy was formed after a group led by Macquarie Group Ltd. and Brookfield Asset Management Inc. agreed in April to buy Apache Corp.’s Australian assets for $2.1 billion. Macquarie has since sold part of its holding to other investors including Wesfarmers Ltd. and Western Australia businesswoman Angela Bennett’s family investment firm.

Separately, both Santos and Quadrant are seeking buyers for the Stag oil field off the Western Australian coast, people familiar with the matter said in September. Santos owns 66.7 percent of the field, while Quadrant owns the rest and is the operator.

Crude oil down on product glut worry

Crude prices edged lower on Monday on worries that the oversupply in oil products could swell from unseasonably warm weather and the waning maintenance cycle for U.S. refineries.

Influential Wall Street trading house Goldman Sachs warned of downside risk for oil prices through spring 2016 as U.S. and European storage utilization for distillates, which include diesel, neared historic highs.

Goldman it would take 50 fewer heating degree days (HDDs) than normal in Europe for storage there to hit tank tops.

HDDs are measured by the difference between the average temperature outside and the 70 degrees Fahrenheit (21 degrees Celsius) level, which is deemed to be neutral indoors for heating. The lower the reading, the less energy products such as heating oil and natural gas are expected to be required for heating.

"While our distillate balances suggest that stocks will fall short of capacity, the margins of error are small and the risks high, leaving risks to current crude oil prices and timespreads as skewed to the downside through next spring," analysts at Goldman Sachs wrote.

Investments in oil are likely to decline further in 2016 after sliding this year by more than a fifth, Fatih Birol, executive director of the International Energy Agency (IEA), said.

"If it comes true, this will be the first time in two decades we will see oil investments declining for two consecutive years and may be an indication for future oil markets," Birol said at Singapore International Energy Week.

Tokyo Gas says Japan LNG demand to dive under 80 mil T in 5 yrs

Japanese liquefied natural gas (LNG) demand will dive by 17 percent or 15 million tonnes in five years to below 80 million tonnes a year as more nuclear reactors are restarted, said a top executive of Tokyo Gas on Monday.

"Last fiscal year, the imported volume of LNG was 89 million tonnes. By 2020, that demand could be reduced," said Shigeru Muraki, executive advisor of Japan's top gas utility on the sidelines of the Singapore International Energy Week.

He said 15 to 20 nuclear reactors could restart in about five years. Other estimates have put the number of nuclear restarts in the next few years as low as seven.

All of Japan's nuclear reactors were shut following the March 2011 tsunami disaster, with the country restarting only two as of August and October.

Still, Tokyo Gas is looking to add 2 million to 3 million tonnes of LNG a year to its current annual offtake of 13 million tonnes as the company expects demand from its own customer base to increase, Muraki said.

Muraki also said Tokyo Gas will continue to use long-term contracts for its basic supply, but he expects traditional sellers to provide more flexibility to buyers, including not limiting contract cargoes to a single destination.

"I don't think traditional sellers will continue to stick to the traditional way of doing contracts. For instance, in the U.S., our LNG contract is based on long term supply but has flexibility in the destination," he said.

"We don't need to offtake everything to our terminals."

With LNG markets more than amply supplied over the next several years, buyers have a chance to get sellers to offer better contractual terms, Muraki said.

Tokyo Gas is also not giving up hopes of investing in a natural gas pipeline linking Russia to Japan despite U.S. sanctions against Russia, or of offtaking LNG from Mozambique despite a lack of infrastructure in East Africa, Muraki said.

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McClendon Seeks Help from Investment Banks

We always thought Aubrey McClendon could sell snow to Eskimos–as the now-politically incorrect but old saying goes. Aubrey can charm money out of your grandmother. At last check more than a year ago he’d raised $8.7 billion of OPM–other people’s money–for use in his aggressive drilling ventures

. We’re pretty sure that number exceeded $10B at some point over the past year.

But then this year we began to hear whispers that Aubrey wasn’t paying his bills. And then Bloomberg published a hit-piece saying Aubrey had sold his investors a bill of goods . Indeed it appears the bloom is off the money-raising rose for Aubrey. According to inside sources, Aubrey has hired investment banks (plural) to help him find more money to keep going…

A Santos takeover could reignite the domestic gas sector

The Santos takeover approach is unique. While clearly Santos shareholders’ interests are paramount, the national interest also becomes important because the Santos bid is a first step in overcoming looming chronic gas shortages and much higher prices ahead for Sydney and later Melbourne.

On the national interest front, the most exciting aspect of the proposed Santos takeover is that some of the longest term oil and gas investors in the world -- the ruling families of Brunei and the United Arab Emirates -- are prepared to invest vast sums to solve Australia’s dreadful gas morass.

Of course, they expect to win longer term, but Australia has never needed substantial investment in our gas industry more than we do now. Most of the existing players are cash-strapped.

Australia’s biggest and most prosperous gas company, Woodside, looked hard at Santos and the domestic gas crisis and decided there were better returns bidding for Oil Search in PNG.

The mismanagement of the three Queensland coal gas ventures -- the consortiums headed by Santos, British Gas and Origin -- created our domestic gas crisis because collectively they contracted to export more gas than they had available in Queensland.

The shortfall was met by gas from the Cooper Basin, which was earmarked for Sydney. Already, steps are being put in place to pipe gas out of the Bass Strait to meet Sydney’s shortfalls, which threatens Melbourne’s supply.

In fairness to Santos and the other Curtis Island gas players, the environmentalists have blocked exploitation of coal gas reserves in other areas to meet the shortfalls.

Nevertheless, what’s required is much bigger investment in the Cooper Basin and in Queensland to develop the gas needed to satisfy the Curtis Island LNG export contracts and our eastern states’ domestic demand.

Debt-racked Santos simply does not have the money to do this because the slump in world gas and oil prices has hit its envisaged LNG cash flows. Indeed, so bad is the current debt position at Santos that the board, which made the fundamental mistakes that got the company into this mess, are looking to break the Santos network up, which may make it even harder for Australia to solve the problem.

Although the crisis has been there for all to see, for over a year Santos is only now getting around to preparing a plan. The proposed asset sales and other moves, when they are announced, will need to be compared to a takeover bid.

If the asset sales involve essential parts of the gas supply network, then Santos shareholders may need to agree to large payments in the future to create an attractive asset for infrastructure investors.

Attached Files

Japan-based Mitsui has signed an agreement with Petróleo Brasileiro (Petrobras) for partial acquisition of shares in the latter's natural gas distribution unit Petrobras Gás (Gaspetro) for about R$1.9bn ($489m).

Through Mitsui Gas, Mitsui is set to acquire 49% of shares in Gaspetro which has equity stakes in local gas distribution companies (LDCs) in 19 Brazilian states.

Mitsui Gas with equity interests in LDCs in seven states was acquired by Mitsui in 2006 and since then the companies worked to improve the gas distribution infrastructure in Brazil.

According to the company, the acquisition of Gaspetro shares will increase the number of states served by gas companies in which Mitsui Gas has an equity interest to 19.

The gas distribution business in the country comprises regional monopolies based on the concessions that are granted by state governments.

Distribution companies develop the gas distribution infrastructure in their service areas in each state including gas pipeline networks, as part of concession agreements signed with the governments.

Gas purchased from Petrobras would be supplied by the companies to power stations and general industrial and commercial users, as well as residential consumers.

Natural Gas plumbs the depths.

The latest weather report showed mild weather across a wide section of the U.S. in the next two weeks, triggering a 9.8 percent plunge in the front-month natural gas contract. The futures ended the session at $2.06 MMBtu, a level last seen in 2012.

Pre-salt breakeven at $48

By Francisco Marcelino

Brazil’s pre-salt oil reserves are viable even with oil prices at $48 per barrel, as Petroleo BrasileiroSA has gained scale, Solange Guedes, the head of exploration and production of the state-owned company, told O Estado de S.Paulo.

Petrobras, as the oil producer is known, has reduced its per-barrel production costs by 11 percent in the past year, Guedes said in an interview conducted via e-mail on Oct. 23 and published Sunday by the Sao Paulo-based newspaper. The company’s well construction costs dropped by about half in the past fiveyears, O Estado said, citing Guedes.

Guedes also said that Petrobras is renegotiating contracts with suppliers to reduce operating costs, according to O Estado.

Attached Files

Cheniere: We won't compete with Russia

The company, headquartered in Houston, is at the forefront of what is being called a U.S. energy renaissance with plans to churn out its first batch of LNG for overseas shipments in the next few months.

Export production volumes at its Sabine Pass export terminal are expected at 27 million metric tons per year (mmtpy), a number set to rise to 60 mmtpy by 2025. That's sparked market talk of whether Cheniere could overcome Russia to become Europe's leading supplier once it begins exporting to the region. Gazprom, Russian state-owned company, currently supplies more than 30 percent of Europe's gas.

But CEO Charif Souki remains cautious, for now.

"Russian gas will still be the dominant player in Europe," he said at the Singapore International Energy Week conference on Monday.

But European nations are already courting Cheniere in an attempt to wean themselves off Russian supply. Earlier this month, Lithuania's Energy Minister Rokas Masiulis announced it was in talks with the U.S. firm regarding potential imports.

"We would love to have U.S. cargo in our region to have competition with Gazprom. But of course negotiations will depend on price terms," Masiulis told Reuters.

Cheniere's shipments are likely to start in January, with natural gas supplies due to arrive at its LNG plant later this year, Souki said on Monday.

Galp Energia beats forecast with 49 pct rise in third-quarter profit

Galp said that after pumping a record 45,700 barrels of oil equivalent per day in the third quarter, production has increased further lately to surpasss the 50 kboepd milestone as the giant Lula/Iracema oilfield off Brazil was pumping more crude than initially expected.

The third Lula/Iracema oil platform off Brazil's coast should reach a plateau during this quarter, ahead of schedule, the company said. Another platform at Lula/Iracema was ramping up production after an early start in July, while two more platforms were on track to be deployed in the first quarter of next year, it said.

Galp reported a net profit of 180 million euros ($199 mln) in the July-September period. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose about 9 percent to 411 million euros. The results are adjusted to reflect changes in the company's stocks of crude.

Analysts polled by Reuters had forecast, on average, an adjusted net profit of 153 million euros and EBITDA of 415 million euros.

Galp's refining margin rose to $6.7 per barrel from $4.7 a year ago, following global trends amid a fall in crude prices. Galp's sales were also helped by recovering demand for fuel in Portugal and Spain.

The company said earlier this month that oil output rose by nearly 44 percent in the third quarter.

U.S. oil drillers slow pace of rig cuts -Baker Hughes

U.S. energy firms reduced oil rigs for an eighth week in a row this week but slowed the rate of those cuts to just one rig, data showed on Friday, a sign some drillers may soon return to the well pad with hopes of rising crude prices in the future.

The total rig count for the week ended Oct. 23 fell to 594, the least since July 2010. Over the past eight weeks, drillers cut a total of 81 rigs, oil services company Baker Hughes Inc said in its closely followed report.

The reduction this week was the lowest since drillers started cutting rigs at the start of September after adding 47 rigs over the summer. Drillers decided to add the rigs over the summer during the spring when crude prices averaged $60 a barrel in May and June.

U.S. oil futures this week however have lost over 5 percent to average $45 a barrel, sliding for a second straight week, on continuing oversupply concerns even as China's latest interest rate cut raised hopes for stronger demand from the world's top energy consumer.

The total count this week is less than half the 1,595 oil rigs in the same week a year ago. Since hitting an all-time high of 1,609 in October 2014, weekly rig count reductions have averaged 19.

With natural gas rigs up one to 193 this week, the total oil and gas rig count held at a 13-year low, according to Baker Hughes.

The rig count is one of several indicators traders look at in trying to figure out whether production will rise or fall over the next several months. Other factors include how fast energy firms complete previously drilled but unfinished wells and rising well efficiency and productivity.

Despite the overall decline in oil rigs, drillers added rigs in two of the four major U.S. shale oil basins this week. They added three in the Niobrara in Colorado and Wyoming and one in the Eagle Ford in South Texas, but removed three in the Permian in West Texas and eastern New Mexico. There were no changes in the Bakken in North Dakota and Montana.

On a weekly basis, the amount of U.S. oil pulled out of the ground has remained about 9.1 million bpd since the start of September, according to EIA's weekly field production report, well below the 9.6 million-barrel per day peak seen in April.

Brazilian panel approves report clearing Petrobras of wrongdoing

A final report approved by a Brazilian congressional panel investigating corruption at state-run oil company Petrobras has blamed suppliers and rogue employees for the graft, rather than politicians or the company.

The committee's final report did not criticize any politicians, including those closely associated with Petrobras, such as President Dilma Rousseff, who was chairwoman of the company's board when much of the corruption happened.

It also spared Eduardo Cunha, the speaker of the lower house who is under investigation by police and prosecutors for alleged corruption.

Rousseff, who is facing a possible impeachment battle, has not been charged or accused by police or prosecutors of any criminal wrongdoing.

The report, which followed eight months of investigation and was approved by a vote of 17 to 9 with one abstention, also denied "institutional corruption" existed at Petroleo Brasileiro SA, as the company is formally known.

Five amendments attempting to alter the text were rejected.

The report has been criticized for failing to censure any politicians or two previous Petrobras chief executives.

Approval of the report comes the week after Brazil's government said Swiss authorities froze $2.4 million in accounts held by Cunha.

Federal prosecutors are investigating Cunha over allegations made during plea bargains that he received a $5 million bribe as part of the Petrobras corruption scheme.

Cunha, who is a member of Brazil's Democratic Movement Party, part of the ruling Workers' Party-led coalition, previously told the committee he had no Swiss bank accounts.

The committee's official rapporteur, Luiz Sergio Nóbrega de Oliveira, a member of the Workers' Party, said his panel received no proof Cunha had bank accounts abroad.

The final report criticizes police and prosecutors handling of the Lava Jato or "Car Wash" probe into contract fixing, bribery and political kickbacks at Petrobras.

The report also criticizes the use of "an excess" of plea-bargains in exchange for reduced sentences to win confessions from key players in the case. The report says there was no proof that money was diverted from Petrobras projects to politicians.

Brazil's plea-bargain law requires that cooperating witnesses provide evidence as well as testimony in order to receive reduced sentences.

Cabot reports Q3 loss

Cabot Oil & Gas Corp. on Friday reported a third-quarter loss of $15.5 million, after reporting a profit in the same period a year earlier.

On a per-share basis, the Houston-based company said it had a loss of 4 cents. Losses, adjusted for one-time gains and costs, came to 1 cent per share.

The results did not meet Wall Street expectations. The average estimate of 17 analysts surveyed by Zacks Investment Research was breakeven on a per-share basis.

The independent oil and gas company posted revenue of $305.3 million in the period, which also missed Street forecasts. Ten analysts surveyed by Zacks expected $354.4 million.

Equivalent production in the third quarter of 2015 was 142.1 billion cubic feet equivalent (Bcfe), consisting of 133.0 billion cubic feet (Bcf) of natural gas and 1.5 million barrels (Mmbbls) of liquids (crude oil/condensate/natural gas liquids). These figures represent increases of 7 percent, 5 percent, and 57 percent, respectively, compared to the third quarter of 2014.

Cash flow from operations in the third quarter of 2015 was $146.4 million, compared to $358.3 million in the third quarter of 2014. Discretionary cash flow in the third quarter of 2015 was $150.4 million, compared to $296.0 million in the third quarter of 2014. Net loss in the third quarter of 2015 was $15.5 million, or $0.04 per share, compared to net income of $100.8 million, or $0.24 per share, in the third quarter of 2014. Excluding the effect of selected items including a $17.6 million after-tax non-cash mark-to-market loss on natural gas derivatives, net loss was $2.2 million, or $0.01 per share, in the third quarter of 2015, compared to net income of $85.0 million, or $0.20 per share, in the third quarter of 2014.

EBITDAX in the third quarter of 2015 was $167.6 million, compared to $325.9 million in the third quarter of 2014. Significant reductions in realized prices for both natural gas and oil were the primary drivers for the lower results in the quarter, partially offset by higher equivalent production and lower overall operating expenses. See the supplemental tables at the end of this press release for a reconciliation of non-GAAP measures including discretionary cash flow, net income excluding selected items, EBITDAX and net debt to adjusted capitalization ratio.

Natural gas price realizations, including the effect of hedges, were $2.02 per thousand cubic feet (Mcf) in the third quarter of 2015, down 34 percent compared to the third quarter of 2014. Excluding the impact of hedges, natural gas price realizations for the quarter were $1.68 per Mcf, representing a $1.09 discount to NYMEX settlement prices. Oil price realizations were $43.71 per barrel (Bbl), down 54 percent compared to the third quarter of 2014.

Total per unit costs (including financing) decreased to $2.35 per thousand cubic feet equivalent (Mcfe) in the third quarter of 2015, an improvement of 7 percent from $2.53 per Mcfe in the third quarter of 2014.

The company is taking only 68 per cent of the volumes it agreed to in 25-year contracts with RasGas of Qatar after a slump in global energy prices led to gas being available in spot or current market a roughly half that rate.

Senior officials said that state-owned GAIL India Ltd, Indian Oil Corp (IOC) and Bharat Petroleum Corp Ltd (BPCL) have committed to buy all of the 7.5 million tonne a year of LNG Petronet is to import from Qatar. But with slump in global prices, they have opted to buy gas from spot market rather than use the long—term LNG.

The reduced offtake by the buyers forced Petronet to cut its purchase from RasGas. This resulted in idling of three cryogenic ships it had chartered hired for ferrying gas in its liquid form at sub—zero temperatures from Qatar to its import terminal at Dahej in Gujarat.

An official said that “The cut in volumes has meant that on an average one out of the three ships is idling.”

But as per charter hire conditions, Petronet continues to pay the day rates.

Official said that “The demurrage charges come to about INR 400 crore per quarter.”

While LNG in the spot market is available at USD 7-8 per million British thermal unit, the price of gas under the long-term contract with RasGas is close to USD 13 per mmBtu.

Pricing of LNG under the long-term deal is linked to the previous 12-month Japan Crude Cocktail (JCC), including caps and floors based on average JCC prices of the past 60 months.

Petronet had hired two LNG tankers of 138,000 cubic meters capacity and one tanker of 155,000 cubic meters capacity from a consortium of shipowners led by Mitsui OSK Lines Ltd of Japan for transportation of 7.5 million tonne per annum of LNG from Qatar to Dahej.

The time-charter agreement is valid till April 30, 2028.

The two 138,000 cubic meters ships were hired at a dayrate of USD 68,900 while the bigger one charges USD 72,880 a day.

Attached Files

Govt rejects Cairn appeal to renew Rajasthan block deal

Image Source: Economic TimesEconomic Times reported that the government has rejected the Cairn India's plea to renew the contract for the prolific Rajasthan block with the existing terms and conditions and has asked for the investment plan for the renewal period to assess the extent to which the state's share of profit can be raised.

Cairn India, controlled by billionaire Mr Anil Agarwal, is seeking to extend the contract to operate the oil and gas block in Barmer, Rajasthan, by 10 years after the 20-year agreement runs out in 2020.

Cairn owns 70% in the joint venture that manages the Barmer block, responsible for nearly one-fourth of India's local oil production, with state-run Oil and Natural gas Corp (ONGC) owning the balance.

The company has been lobbying the government for about two years for an early extension, arguing a clarity on this would make it easier for them to plan future investments. It has also argued against any suggestion of alteration to the terms of the contract.

A senior government official said that "Legally, we can change the terms of the contract if we choose to extend it. We will take a call on the new terms of the contract only after the company shows us their investment plan and output projection for the block."

Attached Files

Gazprom Said to See Its Lowest Europe Gas Price in 11 Years

Gazprom PJSC, the world’s biggest natural gas exporter, is planning for the lowest price for its fuel in its main European market for more than a decade.

The state-run exporter is drafting its budget for 2016 with preliminary estimates for gas prices outside the former Soviet Union of about $200 per 1,000 cubic meters ($5.45 a million British thermal units), said two people with direct knowledge of the matter who asked not to be identified because the information is private. That compares with the company’s estimate of an average price for the region, which covers Turkey and Europe outside the Baltic States, in 2015 of about $238 per 1,000 cubic meters and $349 last year.

The company’s press office declined to comment on estimates.

Gazprom, which supplies about a third of Europe’s gas and relies on exports of the fuel for 40 percent of its annual revenue of more than $100 billion, is facing declining prices abroad as most of its contracts are linked to oil with a time lag of six to nine months. Brent crude has lost 16 percent this year after a 48 percent drop in 2014. The company is also facing increased competition as the U.S. prepares to export its first liquefied natural gas from the Gulf Coast.

“Gazprom’s forecasts look reasonable,” Alexei Kokin, an energy analyst at UralSib Financial Corp. in Moscow, said by phone Friday. Russia has the capacity to maintain its market share in Europe given lower prices next year even amid the predicted glut in LNG, he said.

The Moscow-based company is set to this year note its lowest revenue outside the former USSR in a decade in dollar terms. Sales in rubles may rise to a record, reflecting a 2.2 percent weakening of the Russian currency against the dollar this year, following a 46 percent drop last year.

Exports to the region are expected to stay stable at about 160 billion cubic meters (5.6 trillion cubic feet) in 2016 with revenue in rubles declining but still near the average of the past few years, according to one of the people.

Attached Files

Russia offers gas, oil swap deals to Iran

Russian Energy Minister Alexander Novak said on Friday Kremlin-controlled gas producer Gazprom has offered gas supplies to Iran under a swap arrangement, and similar oil deals were also under consideration.

Moscow has boosted efforts to foster political and economic ties with Tehran and increased its activity after a decision in July to lift international sanctions on Iran in principle. The ending of sanctions, related to Iran's nuclear programme and including restrictions on oil exports, have yet to take effect.

Novak said Iran normally supplies gas to its northern regions from the south of the country and the proposed swap deals would help to cut its transportation costs.

"We could supply gas through to Iran's north and receive gas from the south (of Iran) via swap deals in the form of liquefied natural gas or pipeline gas," Novak told Russian state-run TV Rossiya-24.

"Similar swaps could be done with oil. This is a reduction of transportation costs. Our colleagues have given a positive response to the idea," he added.

Iran is keen to recover oil market share it lost as a result of the international sanctions.

Alternative Energy

Copper Foam Could Revolutionize Battery Storage

Imagine a lightweight battery that can be any size or shape imaginable, that’s economical and environmentally friendly to make and to use, that charges faster than a conventional battery and holds that charge longer.

You’re not dreaming because it may be a reality in the not-too-distant future, powering everything from electric cars to smartphones.

And speaking of dreams, the device from Prieto Battery Inc. in Colorado is made of copper foam.

Prieto Battery is a startup founded by Amy Prieto based on her research as a student at Colorado State University in Fort Collins. The brainchild is what she calls a “3-D battery” made up of the spongy copper, which is meant to be an improvement over the traditional “2-D” battery, which is composed of thin layers of metal surrounded by a current-conducting fluid.

The copper foam – basically copper transformed into a porous structure – is so lacy that, by volume, it is 98 percent air, or void space, but has so much surface area that ions – electrically charged particles – don’t have to travel as far within the foam to be effective, thereby increasing the battery’s power and energy capacity.

A battery anode, or entry terminal for current, is affixed to the foam. This anode is made of copper antimonide, a blend of copper and antimony, a brittle metal often used in alloys. Then the anode-coated foam is combined with a conducting medium called an electrolyte that serves as a surface for moving ions. Then a cathode, or exit terminal for current, is added. The cathode is made of a liquid slurry.

Another drawback of conventional batteries is the use of toxic chemicals, such as sulfuric acid, which can be problematic when they’re being made and when they need to be discarded. Prieto Battery’s products, however, use only non-toxic chemicals, including citric acid.

Probably the two most important improvements are that the Prieto batteries charge quickly and store up to twice as much energy as a conventional battery of the same size. What’s more, the Prieto batteries aren’t prone to overheating as lithium-ion batteries are. And they’re inexpensive to manufacture.

Prieto Battery uses a patent-pending technology to create the copper foam that requires fewer steps than are needed to make conventional batteries. It also ensures uninterrupted energy contact over the entire surface of the anode.

With all this good news, what could be bad? Just this: Prieto Battery says it will be a while before it can mass-produce a working version available to automakers, electronics manufacturers and ordinary consumers.

China Said to Mull Wind, Solar Power Tariff Cuts Through 2020

China is considering cutting the preferential rate it offers wind and solar power developers because the surcharges slapped onto electricity bills to pay for clean-energy subsidies aren’t high enough.

The National Development and Reform Commission, China’s top economic planning agency, plans to cut the tariffs annually in the five years through 2020 to make electricity from clean sources more competitive compared with coal power, according to a document seen by Bloomberg.

China proposes reducing tariffs for wind farms by as much as 5.8 percent in 2016 from current levels and by another 19 percent in 2020 from the 2016 tariff levels. Reductions for solar power projects will be as much as 5.6 percent in 2016 and another 15 percent in 2020, according to the document.

The mismatch between surcharges and what the government pays out to developers of renewable projects is threatening the nation’s plans to use clean energy as part of efforts to combat climate change.

The cuts may have a larger impact on wind power because turbine costs are forecast to drop only about 9 percent by 2020, said Zhou Yiyi, a Shanghai-based analyst from Bloomberg New Energy Finance.

"The room for a reduction in solar technology costs is bigger than that of wind power," Zhou said.

China Longyuan Power Group Corp., the nation’s biggest wind-farm operator, declined as much as 5.4 percent, the biggest decrease since Sept. 23, 2014, to HK$7.21 in Hong Kong trading. Huaneng Renewables Corp. slumped as much as 6.6 percent.

"The reductions will be negative for developers or operators’ profitability," discouraging the market, said Louis Sun, an analyst at BOCOM International Holdings Co. in Shanghai.

Should operational costs decline sharply, the NDRC will study whether to cut the tariffs previously awarded, according to the document.

The NDRC is seeking comment from the two industries. Once agreement is reached, the cuts will come into effect from Jan. 1, 2016. A fax sent to the NDRC seeking comment wasn’t immediately answered.

India likely to propose special session on solar energy in Paris

Economic TimesPTI reported that India is likely to propose a special session on solar energy and issues related to technology transfer to developing nations during the UN climate change summit in Paris later this year.

This was conveyed by Prime Minister Mr Narendra Modi to Mozambique President Mr Filipe Nyusi during his bilateral meeting ahead of the 3rd India Africa Forum Summit here.

Tanmaya Lal, Joint Secretary [E and SA] in the Ministry of External Affairs "Prime Minister Mr Narendra Modi also mentioned that during the upcoming Conference of Parties (CoP21) in Paris, in the context of power requirement. India would be proposing a special gathering to discuss solar energy and issues related to technology transfer in that sector."

India in its recently-announced climate action plans or Intended Nationally Determined Contributions (INDC) has pledged to achieve about 40 percent cumulative electric power installed capacity from "non-fossil fuel" based energy resources by 2030 in which a major chunk would be solar energy.

India has already put forward an ambitious solar energy expansion programme which seeks to enhance the capacity to 100GW by 2022 and is also expected to be scaled up further thereafter.

India has maintained that green technology needs of emerging economies like itself are "crucial" to fight greenhouse gas emissions and has sought financial as well as technological support from developed nations.

Canada's Hydro One IPO prices near high end of range

Ontario electric utility Hydro One's initial public offering priced at C$20.50 per share on Thursday, raising C$1.66 billion ($1.26 billion) and marking one of the biggest IPOs in Canadian history.

The pricing suggested demand was high for a roughly 15 percent stake in the province's largest electric utility.

Earlier this month, the government of Ontario outlined plans to sell up to 89.25 million Hydro One shares in an IPO that was expected to price between C$19 and C$21 a share, valuing the company between C$11.31 billion and C$12.5 billion.

Reuters reported on Wednesday that the offering was expected to price at the high end of that range.

The shares, which will list on the Toronto Stock Exchange under the ticker symbol "H", are expected to begin trading on Nov. 5.

The offering saw "extraordinarily strong demand," said Ed Clark, chair of the Ontario premier's advisory council on government assets. "The offering was significantly oversubscribed."

"This has been textbook run. There's tremendous interest. The market is obviously enthusiastic about it," said Clark, the former chief executive of Toronto-Dominion Bank.

Some 40 percent of the offering has been allocated to retail investors, the company said in a statement on Thursday.

If, as expected, the IPO's underwriters exercise the over-allotment option tied to the deal, the province will raise about C$1.83 billion in total from the deal.

"Having a Hydro One heavyweight will help balance out the resource-heavy Canadian market," he said, adding that it also offers an opportunity to invest in a public utility as it has been "slim pickings" until now.

The privatization of the utility will allow the province to fund transportation infrastructure projects, including public transit, bridges and highways, Ontario Minister of Energy Bob Chiarelli said in a statement.

French power providers face 11 pct rise in renewables surcharge in 2016

The rising cost of funding renewable energy means utility EDF and other French power providers face an 11 percent rise next year in a surcharge they pay that is used to subsidise the renewable sector, the energy watchdog said on Thursday.

That is less than the 17 percent rise this year, however.

France's energy watchdog, CRE, said the surcharge needs to raise 7 billion euros ($7.7 bln) in 2016, up 11 percent from this year.

"The increase in the cost between 2014 and 2016 is due to the development of solar and wind energy sectors, which represent 39 percent and 17 percent respectively of the total estimated surcharge," CRE said in a statement.

To cover the surcharge, heavily indebted EDF levies a tax on French households' electricity bills, called CSPE.

But in recent years, the government has refrained from increasing the CSPE enough to cover these costs to EDF so as to preserve French households' spending power.

The regulator said the shortfall suffered by EDF by the end 2016 would be 3.4 billion euros, down from 5.5 billion euros in 2014.

The rising cost of funding renewable energy has also been a prominent issue in Germany, where solar and wind power capacity has risen faster than in France and has led to higher electricity bills for households.

France passed a new energy bill in August in which renewable energy production will need to increase rapidly to provide 40 percent of France's electricity requirements.

Currently, 75 percent of French electricity comes from nuclear sources.

The company first plans to offer the project to 8Point3 Energy Partners LP, a joint venture between SunPower and rival First Solar Inc that went public in June.

If the deal does not go through, SunPower would directly approach other American utilities and American banks that fit the right profile of buyers, Werner said.

"Berkshire Hathaway (Energy) is one of the potential buyers of the power plant projects if 8Point3 chooses not to buy," Werner said on Wednesday.

Berkshire Hathaway Energy, a unit of Warren Buffett-led holding company Berkshire Hathaway Inc, was not immediately available for comment.

SunPower's power plant business, which has been posting falling revenues for the past three quarters, accounted for nearly 35 percent of its total revenue in the quarter ended Sept. 27.

The company said it would make its final decision by the first half of 2016.

SunPower, majority owned by French energy giant Total SA , in 2013 had sold one of the largest solar projects in the world to Berkshire Hathaway Energy. The project, which is located in Southern California, has a capacity to generate 579 megawatts of power.

Inox Wind net profit jumps 63pct in Q2 2015

Energy solutions provider Inox Wind reported a 63.4 per cent rise in consolidated net profit at INR 89.13 crore for the September quarter.

Inox Wind said that the company’s consolidated net profit in the year—ago period was INR 54.52 crore. Its income from operations during the quarter increased to INR 1,008.22 crore from INR 543.13 crore a year ago.

The group is engaged in the business of manufacturing wind turbine generators (WTG) and also provides related erection, procurement, and commissioning services, operations and maintenance and common infrastructure facility for WTGs and development of projects for wind farms.

Inox Wind has manufacturing plants near Ahmedabad, Gujarat and at Una, Himachal Pradesh.

POSCO may build Magnis Resources' Tanzanian graphite project

South Korea's POSCO may build and help arrange financing for a graphite project in Tanzania being developed by Magnis Resources , as the Australian explorer races to start producing from the east African site by 2017.

Demand for graphite is expected to soar as it is a major ingredient in lithium-ion batteries for hybrid vehicles and wind and solar energy storage, with appetite for greener transport and energy booming.

Magnis said on Tuesday it had signed a memorandum of understanding that could see POSCO Engineering & Construction arrange debt from lenders it has ties with for the $210 million Nachu project, as well as coming up with a fixed-price bid by mid-2016 to build the mine and processing plant.

"The quality of the graphite at Nachu is the best in the world and with the huge demand in the battery market, we are excited to be involved with Magnis," POSCO E&C mining plantbusiness group director Peter Lim said in a statement put out by Magnis.

Electric car maker Tesla Motors Inc is looking for graphite supply for a factory it is building in Nevada which it says will make more lithium ion batteries annually by 2020 than were produced globally in 2013.

Magnis is in talks to line up debt and construction proposals from a range of sources in order to get the most competitive offers and the quickest development plan, said its chairman, Frank Poullas.

The plan with POSCO E&C is similar to one that Magnis lined up with state-owned China National Nonmetallic Minerals Industrial Corp (SINOMA) for $150 million in potential project finance and construction services.

SINOMA is one of two Chinese companies that have agreed to buy a total 180,000 tonnes a year, or about 70 percent, of the planned output from Nachu. Supply agreements like those are key to lining up financing.

"The remaining offtake that we plan to sign will be with western groups, just to spread that risk," Poullas told Reuters.

"What we've seen with a lot of parties looking, when it comes to financing, is they want western offtakes."

Poullas declined to comment on whether Magnis was in talks to supply Tesla.

Spain Approves Solar Taxes!

Until recently, Spain had a very general self-consumption policy framework that applied to both grid-connected and off-grid systems. This month though, Spain's Council of Ministers approved a new self-consumption law that has set the country's solar advocates up in arms with the government.

The main problem with the new law, say solar advocates, is that it taxes self-consumption PV installations even for the electricity they produce for their own use and don’t feed into the grid. Spain's PV sector calls the new law a 'sun tax.’

According to Spain’s Photovoltaic Union (UNEF), the new law requires self-consumption PV system owners to pay the same grid fees that all electricity consumers in Spain pay, plus a so-called 'sun tax'. Specifically, said UNEF, a self-consumption PV owner "will pay a 'sun tax' for the whole power [capacity] installed (the power that you contracted to your electricity company, plus the power from your PV installation) and also another [second] 'sun tax' for the electricity that you generate and self-consume from your own PV installation (this applies to installations larger than 10 kW)."

Installations smaller than 10 kW and all installations in the Canary Islands and the cities of Ceuta and Melilla (these are Spanish territories in Africa) will be exempted from the second 'solar tax.' Furthermore, installations with co-generation will be exempted of the second 'sun tax' until 2020 and the Balearic islands of Mallorca and Minorca will pay a reduced price. Off-grid installations will obviously not pay any grid tax whatsoever.

The new law also prohibits PV systems up to 100 kW from selling electricity. Instead, their owners are required to donate the extra electricity to the grid for free. Systems over 100 kW must register in order to sell electricity in the spot market for the excess power they generate. Limitations do not end at this point though. Thus, for PV systems up to 100 kW the owner of the installation must be the owner of the contract with the electricity company, while community ownership is prohibited altogether for all sizes of self-consumption systems.

Finally, the law is retroactive meaning that all existing self-consumption PV installations need to comply with the new regulations otherwise face an astronomically high penalty fee up to €60 million. This sanction, UNEF notes, is double the fine set for radioactive leaks from nuclear plants.

The Islands' Paradox

Regarding Spain's non-mainland territories, the new law makes even less sense, argues UNEF, since the cost of electricity supply is particularly high (about €184 per MWh in the Canaries and €139 per MWh in the Balearics), adding €1.8 billion to the Spanish consumers' total electricity bill. On the contrary, UNEF adds, self-consumption systems have costs below €100 per MWh and are an ideal solution for island territories where self-supply generation, at the point of consumption, is more economical than power transmission from the peninsula.

DuPont sees sales falling on strong dollar, weak farm demand

Chemicals and seed producer DuPont said it expects full-year sales to fall by 11-12 percent, hurt by a strong dollar and weak demand for pesticides and insecticides, particularly in Brazil.

DuPont, which gets about 60 percent of its sales from outside North America, said net sales fell 17.5 percent to $4.87 billion in the third quarter ended Sept. 30, missing the average analyst estimate of $5.3 billion.

However, lower costs helped the company post a bigger-than-expected quarterly profit.

DuPont has speeded up cost cuts to counter weakening sales and to appease activist investor Nelson Peltz, who has criticized the company's cost structure and its inability to meet financial targets.

Cost cuts contributed 10 cents per share to third-quarter operating earnings of 13 cents, helping the company beat the average analyst estimate of 10 cents.

"Amid the current challenging macro environment, our priority is to aggressively manage what is within our control, including taking a fresh look at DuPont's cost structure and capital allocation strategy to identify ways to further improve shareholder return," Edward Breen, DuPont's interim chief executive, said in a statement on Tuesday.

Breen, who took over after Ellen Kullman stepped down from her post earlier this month, is expected to take a more aggressive approach to cost-cutting.

DuPont is targeting about $1.6 billion in annual savings by the end of 2017.

The company's agriculture business was a major drag on third-quarter earnings as weak demand for seed and crop protection products in a competitive market hurt the business.

DuPont expects sales in the unit to fall by "low-teens" in percentage terms in the current quarter.

The strong dollar also contributed to the weakness in DuPont's agriculture business and weighed on four of its other five units.

Net income attributable to DuPont nearly halved to $235 million, or 26 cents per share, in the quarter ended Sept. 30.

DuPont is in M&A talks with rivals for its agriculture business, interim Chief Executive Edward Breen said on Tuesday, less than a week after Dow Chemical Co announced a review of its farm chemicals and seeds unit.

Monsanto clears USDA regulatory hurdle for new GMO corn

The U.S. Department of Agriculture on Friday signed off on a new genetically modified type of corn developed by Monsanto Co after a review concluded it posed no significant threat to agricultural crops, other plants or the environment.

The USDA's Animal and Plant Health Inspection Service (APHIS) announced it would deregulate Monsanto's MON 87411 maize, which was developed to protect plants against corn rootworms that can damage roots and drag down grain yields and be tolerant to the herbicide glyphosate.

The so-called trait would be inserted into a line of corn seeds' genetic code and could be "stacked" with other traits.

The Vancouver-based miner on Thursday also confirmed its 2015 forecast for production at the high end of a range between 3.3 million and 3.6 million ounces of gold, all-in sustaining costs of $850 to $900 an ounce and capital spending of $1.2 billion to $1.4 billion.

Its net loss widened to $192 million, or 23 cents a share, from $44 million, or 5 cents a share, in the same period last year.

The adjusted loss was $37 million, or 4 cents a share, compared with an adjusted profit of $70 million, or 9 cents a share. The adjusted loss included a reduction in the carrying values of inventory stockpiles of $40 million, or 5 cents a share, and noncash, stock-based compensation costs of about $14 million, or 2 cents a share.

Analysts, on average, expected Goldcorp to earn an adjusted profit of 4 cents a share, according to Thomson Reuters I/B/E/S.

Free cash flow was $243 million, compared with a negative $355 million in the prior-year period.

All-in sustaining costs to produce an ounce of gold, which includes sustaining capital, exploration and general expenses, fell to $848 in the quarter from $1,066 last year.

In the quarter, gold production increased to a record 922,200 ounces from 651,700 as the average realized price fell to $1,114 per ounce from $1,266 ounce.

In September, the company trimmed its full-year production estimate for its Eleonore mine in Canada. Due to lower gold grades from unexpected folds and faults in the ore body, Goldcorp clipped the forecast to 250,000-270,000 ounces of gold from 290,000-330,000 ounces.

Attached Files

Newmont earnings beat market expectations, cuts cost outlook

Newmont Mining Corp, the biggest U.S.-based gold miner, reported lower earnings on Wednesday but the results were better than the market expected on the back higher gold production and lower cost.

Denver-based Newmont also improved its cost outlook for the year and announced it would expand its Tanami gold mine in Australia.

Newmont said its net income from continuing operations was $202 million, or 38 cents a share, in the quarter ended September 30, from $210 million, or a 42 cents a share, in the same period a year ago.

Adjusted net income was $126 million, or 23 cents a share, ahead of analysts expectations of 17 cents, on average, according to Thomson Reuters I/B/E/S.

Newmont lowered its forecast for all-in sustaining costs this year to between $880 and $940 an ounce. Its previous forecast was for costs of between $920 and $980 in 2015.

It left its 2015 production forecast of 4.7 million ounces to 5.1 million ounces unchanged.

In the third quarter, attributable gold production from Newmont mines in the Americas, Australia, Asia and Africa rose to 1.34 million ounces of gold and 48,000 tonnes of copper in the quarter. That compares with 1.15 million ounces of gold and 13,000 tonnes of copper in the third quarter of 2014.

All-in sustaining costs to produce one ounce of gold improved to $835 an ounce in the third quarter from $995 in the same quarter a year ago.

Barrick earnings beat market expectations, cuts debt

Barrick Gold Corp, the world's biggest gold producer, reported lower quarterly adjusted earnings on Wednesday due to weaker gold and copper prices but results were better than the market expected.

The Toronto-based miner, which has the highest debt of any gold miner, said it had reduced its debt to $11.2 billion as of Wednesday. That is down from $12.8 billion at the end of June and $13.1 billion at the start of the year.

Barrick, like rival Newmont Mining Corp, gave an improved cost outlook for the year.

It also expects to announce the outcome of the sale of a package of six U.S. gold assets in the fourth quarter.

Earlier, Barrick reported adjusted net earnings of $131 million, or 11 cents a share in the three months to end-September, compared to $222 million, or 19 cents a share in the same period a year ago. Analysts expected the miner to earn 7 cents a share, according to Thomson Reuters I/B/E/S.

On a net basis, Barrick swung to a third-quarter loss of $264 million, or 23 cents a share, as it booked a $455 million impairment charge related primarily to an accounting reclassification of its Zaldivar copper mine in Chile as "held-for-sale."

Barrick agreed in July to sell 50 percent of its Zaldivar mine to copper miner Antofagasta Plc for $1 billion in cash.

Barrick said it now expected lower all-in sustaining costs of between $830 and $870 per ounce this year. That compared with a previous forecast of between $840 and $880 per ounce.

Full-year gold production is expected to be between 6.1 million and 6.3 million ounces, as Barrick lowered the top end of the band from 6.4 million ounces to reflect expectations of lower gold production from Acacia Mining Plc.

Barrick said it plans to use about $1 billion of the proceeds from the Zaldívar sale, which is expected to close in the fourth quarter, to reduce debt. This would bring total debt repayments this year to about $2.9 billion. It will use free cash flow to reach its target of $3 billion for the year.

Barrick, which has mines in the Americas, Australia and Africa, said it produced 1.663 million ounces of gold in the third quarter, slightly up from 1.649 million ounces in the comparable quarter in 2013.

The miner said its all-in sustaining costs, the industry cost benchmark, were $771 per ounce in the quarter, compared with $834 an ounce in the same quarter a year ago.

China's gold imports from Hong Kong jump to 10-month high

China's net gold imports from main conduit Hong Kong jumped to a ten-month high in September, data showed on Tuesday, in a strong sign of recovering demand in the second half of the year.

Imports by the world's top consumer have now risen for three consecutive months, with the third quarter recording the best quarter of the year for overseas purchases.

China's appetite for gold has improved in the second half of 2015, as domestic stock markets performed badly.

Its net gold imports from Hong Kong rose to 97.242 tonnes last month from 59.319 tonnes in August, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.

September's imports were the highest monthly overseas purchases since November 2014.

The robust numbers came in the lead up to a seasonally strong fourth quarter.

China's peak season for gold demand kicked off from the national day holiday in the first week of October. It lasts until the Lunar New Year early next year as gold is a popular choice for gift giving.

Imports have also been boosted by higher premiums as banks can make a good profit from the difference between global and Chinese gold prices, traders have said.

"Having said that, we still expect China's total gold demand to record a second consecutive annual decline in 2015," GFMS said.

Chinese demand hit in a record high in 2013, when gold prices slumped following a 12-year rally, but consumption has eased since that buying frenzy.

Gold demand rises in Q3 on surge in coin, bar buying - GFMS

Surging demand for coins and bars and a rise in buying by central banks pushed physical gold demand up 7 percent in the third quarter, an industry report showed on Tuesday, though the market remained in a surplus of 51 tonnes.

Demand for gold coins and bars jumped by 26 percent year-on-year in the last quarter, GFMS analysts at Thomson Reuters reported in the Q3 update of their Gold Survey 2015.

"A sharp price correction in July, which saw the gold price plunge to a near six-year low at the start of the quarter, was the major driver behind Q3 growth," GFMS said.

Central bank purchases picked up speed in the third quarter after a quiet start to the year, rising 13 percent to 132 tonnes. Russia is expected to be this year's biggest reported official-sector gold buyer.

Central banks are expected to become net buyers of gold for a sixth consecutive year in 2015, the report said.

Nonetheless, the group's price view for this year remains cautious due to continued uncertainty over the timing of a rise in interest rates by the Federal Reserve, low inflation expectations, and weak investor sentiment.

"We expect gold to average $1,100 an ounce in Q4 2015, down by $75 an ounce from our previous forecast, which brings an annual average of $1,159 in 2015," it said.

"Gold is set to remain under pressure until there is more clarity on the timing and the scale of U.S. rates normalisation."

Gold prices held near $1,165 an ounce on Monday.

Jewellery fabrication, the biggest individual segment of demand, fell 1 percent in the third quarter to 510 tonnes. European jewellery consumption fell 23 percent on the back of plunging demand from Russia and Turkey.

India regained its position as the world's biggest gold consumer from China in the first three quarters of the year, GFMS said, with overall consumption of 642 tonnes. Chinese consumption stood at 579 tonnes.

"We still expect China's total gold demand to record a second consecutive annual decline in 2015," GFMS said, though it added that it expected consumption to be stronger in the second half of the year than the first, and for Chinese demand to grow modestly next year.

On the supply side of the market, mine output was broadly flat year-on-year in the last quarter, while scrap supply rose 3 percent on strong gains in India and Turkey.

India's gold monetisation scheme may be ready in weeks - Modi

A programme to attract gold owned by households into a bank deposit scheme to monetise the precious metal could be ready in weeks, Prime Minister Narendra Modi said on Sunday, a step aimed at cutting expensive imports.

The scheme would allow people to put their gold into banks in return for interest payments in an attempt to mobilise thousands of tonnes of the metal sitting idle in Indian households.

Indians prize gold as gifts and as a way of storing wealth. The country consumes nearly 1,000 tonnes of gold every year, most of it imported, and gold is the second-biggest expense on the import bill after oil.

In his monthly radio address, Modi said the programme should be ready before Dhanteras next month, a festival when it is considered an auspicious period to buy gold.

"Please, don't let your gold be dead money," Modi said. "Gold is very important for the country. Gold can become an economic strength for us."

Huge gold imports were blamed for pushing the country's current account deficit to a record $190 billion in 2013, prompting the government to hike its duty on imports to 10 percent, an all-time high.

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Base Metals

Philippines says $2bn King-King copper mine may get approval soon

Philippines says $2bn King-King copper mine may get approval soon

The Philippines said on Friday it may soon allow development of the $2-billion King-King copper-gold project to proceed in the country's southern mining province of Compostela Valley. A move to issue a "notice to proceed" would mark the first time the country has issued a permit to develop a new mine since 2012, pending legislation to increase the government's share of mining revenues.

"We may be able to approve the DMPF (by) mid-November," Mines and Geosciences Bureau (MGB) Director Leo Jasareno said, referring to the developer's Declaration of Mining Project Feasibility. He was speaking at an industry forum organised by the American Chamber of Commerce.

The open-pit mine could have an annual output of 138-million pounds of copper, about half a million ounces of silver, and more than 236 000 oz of gold over a period of 22 years.

The DMPF's approval means the Filipino-owned Nationwide Development Corporation (Nadecor), which holds the mining rights over King-King, can proceed to the development stage, he said. Toronto-listed St Augustine Gold & Copper Ltd also has a stake in the project.

King-King is one of several major Philippine mining projects that are unaffected by a moratorium on approvals for new production because they were already in advanced stage before the ban took effect.

Philex can extend Padcal copper-gold mining by 2 years

Philex Mining Corp, one of the Philippines' biggest miners, said on Thursday it had found additional ore reserves at its Padcal copper-gold project that will extend the mine's life by two more years to 2022.

Philex, which exports most of its Padcal copper concentrate to Japan for smelting by Pan Pacific Copper Co Ltd, part of JX Holdings Inc and partly owned by Mitsui Mining and Smelting Co Ltd, said the extra reserves should enhance the company's value.

The additional ore reserves found at Padcal in northern Philippines, estimated at 20 million tonnes, provide the company with more flexibility before the Silangan project comes onstream, Philex said in a statement.

Philex has been cleared by the government to proceed with the development of Silangan, which will initially have a 25-year mine life, paving the way for production to potentially begin in 2018, four years before Padcal closes.

Antofagasta cuts annual copper output forecast for third time

Chile's Antofagasta Plc on Wednesday cut its annual copper production forecast for the third time this year, sending its shares lower as the miner posted steady output in the third quarter versus the second.

Like its peers, London-listed Antofagasta is battling a slide in commodity prices as a result of slowing growth in China, the world's top consumer of industrial metals.

The miner has this year also been hurt by declining ore grades, unfavourable weather and environmental protests.

It cut its full-year copper output guidance to 635,000 tonnes from 665,000 after delayed ramp-up at its Centinela Concentrates operations and a minor pit wall slide at its Centinela Cathodes operations.

The company had to suspend operations at its Centinela, Michilla and Antucoya operations in March due to unusually heavy rains in the Atacama desert.

Antofagasta said its copper production in the third quarter was 157,000 tonnes, in line with the second quarter.

The miner had been focusing on its $1.9 billion Antucoya greenfield project and other brownfield expansions to cope with a fall in production, due to ageing mines and declining copper grades.

It said on Wednesday that it achieved its first output at Antucoya in September, producing 2,200 tonnes of copper cathode.

Net cash costs were down 11.3 percent quarter on quarter to $1.42 per pound and the company maintained its net cash cost guidance for the year at $1.47 per pound.

"That cash cost guidance remains intact is a bonus provided by the macro environment, however still not ideal in a falling commodity price environment," Investec analysts said in a note.

"We remain bearish on the stock and warn investors of increasingly reduced dividend potential from weaker earnings profile, high capex spend and acquisition of Zaldivar undermining the balance sheet."

Antofagasta agreed in July to buy a 50 percent stake in Barrick Gold's Zaldivar copper mine in Chile for $1 billion in cash..

The deal is expected to close in the fourth-quarter of this year, the company said.

The company is targeting savings of about $160 million this year and its chief executive told Reuters earlier this month it had cut back on exploration to cut costs.

Grupo Mexico profit falls almost 40 pct, hit by lower revenue

Mexican mining, rail and infrastructure company Grupo Mexico said on Tuesday its third-quarter net profit fell nearly 40 percent compared with the year-earlier period, hit by a drop in sales.

Grupo Mexico posted a net profit of $297 million for the three-month period, down from $485 million in the same quarter a year earlier.

Revenue for the quarter dropped 22 percent to $1.9 billion.

Metals prices have gone down in recent years and the company has come to rely more on its rail division. Grupo Mexico decided, however, to postpone an initial public offering of its rail unit ITM that was planned for June.

Rusal keeps Q3 aluminium production steady in face of price slump

Russia's United Company Rusal Plc held its aluminium output steady in the third quarter and reaffirmed it was reviewing some of its operations, as global prices droop to six-year lows.

The world's top aluminium producer churned out 916,000 tonnes in the third quarter, up 1 percent on the prior quarter. For the first three quarters, production edged up by 1.4 percent to 2.7 million tonnes.

Aluminium prices have slumped 20 percent this year on the London Metal Exchange to below $1,500 a tonne, levels last seen after the 2008-2009 financial crisis, as growing appetite for the metal used in aerospace and automotives is eclipsed by increased exports from China.

Rusal, insulated by a weaker ruble, said sales prices were down by 13 percent on the previous quarter.

The supply glut is stoking trade tensions. The U.S. Aluminum Association asked U.S. authorities to investigate allegations of misclassification of Chinese aluminium exports in September.

In Shanghai, prices have struck successive record lows this month and are expected to fall further, reflecting lower input costs and a reluctance by regional governments to shutter capacity that provides jobs and contributes to economic growth.

Rusal reiterated its April guidance that it is considering further aluminium capacity production cuts of some 200,000 tonnes.

New Silk Road Could See China Gain Control Of The Copper Markets

A few offhand comments last week may show a massive new plan underway in global copper investment; one that could see major consumer China take the metals world by surprise.

High-level Chinese officials gave some strong hints of such a move at an industry conference last week in the southwestern city of Nanning, saying that Chinese companies may use a recent geo-strategic initiative as a device to control copper concentrate supply.

The development in question is China's new "Silk Road" investment initiative. A policy I've previously discussed in relation to the gold market, but which now looks set to impact base metals as well.

Under the Silk Road plan, China is building stronger economic links with nations along the ancient trade route -- spanning 60 countries from the Stans through to Iran, Turkey and Serbia. And that creates a major opportunity in copper, according to speakers at last week's Nanning conference.

Changhua pointed to this a major opportunity for Chinese metals companies, suggesting that Chinese firms should preferentially buy copper concentrates from these countries for processing at facilities in China.

He also noted that Chinese firms should cement their influence in Silk Road copper nations by building smelters in these countries. A sentiment that was later echoed at the conference by the head of copper for China Nonferrous Metals Industry Association, Duan Shaofu -- who said at least one Chinese metals firm is looking at constructing a copper smelter in Kazakhstan in "support of Beijing's strategy."

Those last words suggest a concerted effort is underway to control copper supply in this important producing region; an important note for both buyers and sellers in the copper market.

Tom Albanese, Chief Executive Officer, Vedanta Limited, said: "Our diversified asset portfolio has delivered a strong operating performance, including record production from our tier-1 Zinc mines, resulting in strong free cash flows during the quarter. We are continuing to drive efficiency improvements and optimise opex and capex across the business, taking measured steps to reduce net debt and maximise free cash flow. While the near-term market outlook is challenging, we believe we have the right mix of low cost assets fuelled with new technologies to benefit from future demand in India and globally."

Attached Files

Iranian copper output to increase by 17 pc

IRNA reported that Managing Director of National Iranian Copper Industries Company Mr Ahmad Moradalizadeh said on Sunday that Iran will produce some 250,000 tonnes of copper this year which shows 17 percent increase compared to figures from last year.

He predicted that Iran's output of copper and concentrated copper will reach 400,000 tonne and 1.5 million tonnes respectively by the end of Iranian calendar year 1398 (March 2020) respectively.

Chile's Cochilco cuts 2015 copper forecast to 5.68m tonnes

State copper consultancy Cochilco revised down its forecast for Chile's 2015 copper production for the fourth time this year on Friday, estimating that the top copper exporter will produce 5.68-million tonnes of the red metal. As recently as July, Cochilco had said that Chile would produce 5.88-million tonnes of copper, and in January it had estimated that output would likely come to six-million tonnes.

But low prices on weak demand in key buyer China have led mining companies to delay new projects and lay off workers, while a slew of natural disasters and labour disputes has also hurt production.

Cochilco also revised down its copper price forecast to $2.53/lb in 2015, and $2.50/lb in 2016. It had projected the 2015 price at $2.77/lb in July. The weak market has led some miners to signal that they would seek to cut production. Chile's large Collahuasi mine, owned by Anglo American and Glencore, said in September it would cut production by 30 000 t.

Meanwhile, state-owned copper miner Codelco has said it would likely not get back any of its profits from the government this year, and is expected to announce more delays to new projects.

MMG’s gigantic Las Bambas mine in Peru to open next year despite protests

The mine, located at 4,000 metres in the south of the South American country, is set to deliver 400,000 tonnes of copper per year during the first five years of production placing it within the top three copper mines globally.

MMG’s Las Bambas copper mine in Peru, one of the world's biggest mines of the red metal, is on track to begin production in the first quarter of 2016, despite weak prices and relentless protests against the project that left four dead and 16 seriously injured last month.

Melbourne-based and Hong Kong-listed MMG, which acquired the $7.4 billion copper-silver-molybdenum mine from Glencore (LON:GLEN) in August 2014, said it has already completed the installation of conveyor belts, while all four electric shovels and 38 trucks are operational.

A shipment of 600 concentrate transport containers were dispatched from China and 80 rail wagons are ready for shipping, MMG said, adding that it expects to spend a total $1.9-2.4 billion this year at the project.

"While we have some challenges ahead yet, the Las Bambas team is to be congratulated for their commitment to deliver this flagship project on schedule and within budget," MMG CEO Andrew Michelmore said in a statement.

Las Bambas is set to deliver 400,000 tonnes of copper per year during the first five years of production placing it within the top three copper mines globally.

The mine, located at 4,000 metres in the south of the South American country, will also produce significant amounts of silver, gold and molybdenum over its 20-year mine life. Las Bambas boasts 6.9 million tonnes of copper reserves and a 10.5 million tonne resource.

Attached Files

China's Zhongwang evading aluminium import duties -U.S. group

U.S. aluminium extruders have accused Zhongwang Group, the world's second largest producer of aluminium extrusions, of evading U.S. import duties, firing the first salvo in a dispute over China's ballooning exports.

In a petition filed with the U.S. Commerce Department late on Thursday, the U.S. Aluminium Extruders Council (AEC) alleged China Zhongwang Holdings Ltd is shipping extruded aluminium products, including pallets and 5050 alloy extrusions, into the United States without paying duties.

" Zhongwang has been engaged in a concerted effort to avoid U.S. duties and maximize its ability to continue to flood the global market with unfairly traded Chinese aluminium," the complaint said.

Extrusion is the process of shaping aluminium, by forcing it to flow through an opening in a die.

The complaint asked the government to clarify that pallets and 5050 alloys are subject to the antidumping and counterveiling duties introduced in 2011. That ruling marked a major victory for U.S. extruders that argued Chinese exports were unfairly subsidized.

The AEC's complaint said Zhongwang's shipments of both materials into the United States have increased substantially since the duties were put in place.

The Commerce Department has 45 days to initiate an investigation.

The filing is the first formal move to curb China's aluminium exports, which U.S. producers say have grown steadily over the past year.

U.S. producers like Alcoa Inc say this has hurt prices and margins, helping push London Metal Exchange prices to six-year lows.

The Aluminium Association, which represents aluminium producers and fabricators, has called on U.S. regulators to probe mislabelling of China's exports of semifabricated aluminium products to avoid paying duties.

The AEC's case is separate from any action the Aluminum Association might take, but highlights deepening worries about the impact of China's surplus inventory on the global market.

The allegations come months after short-seller Dupre Analytics alleged Zhongwang inflated sales by sending shipments to companies it controls offshore, which the company dismissed as "groundless or untrue."

At the time, the AEC called on several governments to investigate the claims.

Zhongwang's sales to the United States fell 86 percent, to $62.5 million, in 2011 after the duties were imposed. But revenue bounced back in 2012 and continued rising to $302.9 million in 2014, which the complaint attributed to pallet shipments.

"Zhongwang appears to have created these "pallets" sepcifically for the purpose of circumventing the orders," the complaint read.

OZ Minerals lifts copper guidance

OZ Minerals has lifted its full-year copper output guidance as a record run of production buoys the miner's fortunes.

In the quarter, OZ Minerals produced 33,518 tonnes of copper, a 28 per cent increase on the previous corresponding period and a slight improvement on the 32,991 tonnes produced in the second quarter.

Year-to-date copper production stands at 97,669 and OZ Minerals now expects full-year production to come in between 126,000 and 131,000 tonnes. Previously it had expected output between 110,000 and 120,000 tonnes.

“Prominent Hill is having a very strong year,” managing director Andrew Cole said.

“The last three quarters have been the strongest in five years and we are now confident that we will exceed our original production guidance target.”

Gold production in the quarter totalled 23,817 ounces, a modest decline on the 24,790 ounces produced in the second quarter.

Cash costs fell to US74.3c per pound, down from US75.3c per pound in the second quarter.

OZ Minerals also reduced it full-year cost guidance reduced to US70c to US80c per pound of payable copper, from US80c to US95c per pound previously.

Steel, Iron Ore and Coal

Large and medium steel mills 3Q losses at 28.1 bln yuan

China’s large and medium steel producers suffered a combined loss of 28.12 billion yuan ($4.43 billion) in net profit in the first three quarters this year, with loss from core business revenue at 55.27 billion yuan, showed data from the China Iron and Steel Association (CISA).

49 steel producers or 48.51% CISA members were in the red during the same period, with total loss soaring 352.85% on year to 45.04 billion yuan, data showed.

The overall loss in the sector was resulted from persisting oversupply and subduing demand amid slowing economic growth.

Over January-September, China’s consumption of crude steel posted a year-on-year decline of 5.82%, with September consumption down 8.65%.

The output of crude steel also saw a drop of 2.14% on year to 610 million tonnes during the same period.

“The production control” would be the only way to tackle the supply glut, given the current economic environment. Additionally, the transformation of steel enterprises and differentiated competition of the market are future developing directions for steel sector, said Zhu Jimin, a senior official with the association.

Coal shipments from Indonesia will plunge as much as 17 percent next year, with most miners in the world's No.1 exporter of thermal coal losing money and slashing output, a senior industry official said on Friday.

Indonesia will export less than 300 million tonnes in 2016 from 330-360 million tonnes this year, the chairman of the country's top coal industry association told Reuters.

Reduced shipments from the Southeast Asian nation could help bolster international prices hit by oversupply and slowing Chinese demand. Benchmark thermal coal has dropped around 16 percent in 2015 to stand near nine-year lows at $51.84 a tonne.

"About 60-70 percent of domestic producers are underwater -meaning that their cash flow is not enough to sustain their business," said Pandu Sjahrir from the Indonesian Coal Mining Association. He added that domestic coal demand would be 90-110 million tonnes in 2016 compared to 90 million this year.

Indonesian miners are now either halting production or doing "selective mining" of easier to access coal, said Sjahrir, who estimates benchmark prices will average $60 a tonne in 2016.

A mining ministry official last week said Indonesia's exports of coal fell 20 percent from January to September this year.

To help its coal miners, whose sector and related industries employ about 1 million people, Indonesia's government has abandoned plans to ramp up coal royalties, Sjahrir said.

The country's finance minister had earlier said that plans to increase government revenues from the mining sector would be shelved if prices stayed low.

To combat slowing Chinese and Indian demand for Indonesian coal, which accounts for roughly half of the country's total exports, miners are increasingly investing in domesticpower projects, Sjahrir said.

The government has set an ambitious goal of building 35 gigawatts of new power stations by 2019.

But with the majority of these new power plants likely to be coal-powered, there are doubts the country can meet its new commitment on cutting greenhouse gas emissions growth by 29 percent by 2030.

The Indonesian government will have to increase power tariffs for consumers or offer subsidies to attract investment in modern and low-emission power plants to meet both its energy and greenhouse gas emissions targets, Sjahrir said.

Attached Files

Mining machinery sold dirt cheap in Australia as downturn bites

Image Source: ABCABC reported that auctioneers are hard at work selling tens of millions of dollars of coal mining machinery for just a fraction of its original market value.The severe downturn in the Australian resources sector has led to a massive oversupply of equipment, and much of it is unsuitable for use in any other industry. This means unwanted excavators, trucks and sundry heavy machinery will end up as scrap, if not sold at auction.

The plant and equipment at auction at Charbon in central New South Wales was owned by Big Rim, a mining services contractor which collapsed after the miners it serviced also closed. When the auction began the owners of a once-thriving business were hoping this fire sale would at the very least cover their debts.

Mr Peter Turner's Gold Coast company Turner Engineering used to compete for contracts with Big Rim. He said "I'd be interested in at least 50 per cent of what's here, and there are at least 100 machines here. It's got to be at least 30 per cent or 40 per cent under value. Closer to 50 most probably. It's been a very good day for me, very profitable day for me.”

Mr Chris Hassall, whose company is conducting the auction, said "At the moment we've probably got the worst downturn I've seen in 25 years.”

"The steel sector was undergoing severe adjustments in the third quarter, with consumption remaining weak as the country's macro economy was sluggish," Baosteel said.

Its results reflected a dismal performance in China's steel sector, the largest producer in the world.

Shanxi Taigang Stainless Steel Co Ltd and Liuzhou Iron & Steel Co Ltd said on Tuesday they had swung to the red in the third quarter, while Hebei Iron and Steel Co Ltd posted a 10 percent fall in net profit.

Baosteel's results came after China's market closed with its shares down 0.7 percent, outperforming a 1.9 percent decline in the CSI300 index of the largest listed companies in Shanghai and Shenzhen.

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China Coal Energy Jan-Sep profit slump 353pct on yr

China Coal Energy Co., Ltd, the country’s second largest coal producer, saw its net profits slump 352.8% from 659 million yuan ($103.7 million) last year to a loss of 1.67 billion yuan over January-September this year, said the latest announcement of the company.

The plunging coal prices amid persisting sluggish market may be the one to blame, the announcement said.

In the first half of the year, the company suffered a net loss of 0.97 billion yuan, which was the first half-year loss since the company’s IPO in 2008.

The company produced 71.59 million tonnes of commercial coal in the first nine months, falling 18.1% on year. Of this, thermal coal output fell 21.7% on year to 64.96 million tonnes; coking coal output rose 50% on year to 6.63 million tonnes.

During the same period, commercial coal sales of the company decreased 12% from a year ago to 101.2 million tonnes, with self-produced coal sales at 71.58 million tonnes, down 11.6% on year.

Sales of thermal coal slid 14.7% on year to 65.21 million tonnes between January and September, with average sales price at 289 yuan/t, a year-on-year decline of 19%.

Those of coking coal increased 39.4% from the previous year to 6.37 million tonnes, with average price at 451 yuan/t, down 18.9% on year.

The sales cost for the company’s self-produced commercial coal averaged 167.71 yuan/t over January-September, falling 12.5% from the same period last year and lower 14.2% from the annual average level last year.

The company may continue to face losses amid overall supply glut and flat demand in coal market, it predicted.

China steel industry expected to be forced into deeper output cuts

Chinese steel mills are likely to be forced into making deeper cuts in output over the next few months, as shrinking demand, soaring losses and tighter credit undermine firms in the world's biggest producer, industry officials and analysts said.

The industry has defied pressure to make big cuts so far, though the bottom line of steel firms is suffering and efforts to boost exports have riled rival producers in countries ranging from India to the United States.

Major steel producers suffered total losses of 28.12 billion yuan ($4.42 billion) in the first three quarters of 2015, the China Iron and Steel Association (CISA) said.

"Since 2010, government departments have issued 20 policy documents to eliminate inefficient capacity, and some has been shut, but overall capacity still hasn't fallen," CISA vice-chairman Zhu Jimin told a briefing.

But with steel prices at their lowest in decades state-owned mills are starting to close plants.

Bayi Steel, a unit of China's second-largest steelmaker, the Baosteel Group, has already shut a production base that has an annual capacity of 3 million tonnes.

Hangzhou Iron & Steel, another state-owned mill, will close its main Banshan production base by the end of 2015, while Maanshan Iron & Steel will shut some production lines in the fourth quarter, the firms said.

"Output cuts will accelerate by the first quarter of 2016, though a cliff drop is still unlikely, and iron ore prices could fall further to an average of $40-50 a tonne next year," said Zhao Chaoyue, an analyst with Merchant Futures in Guangzhou.

Iron ore prices .IO62-CNI=SI have slumped nearly 30 percent since the beginning of this year to $50.80 on a rising tide of production and slowing demand.

Private Chinese steel firms running at a loss are also at risk of going bust if banks demand loan repayments.

"It is a clear trend that credit is getting tighter and tighter. Once the cash chain is cut off, steel mills will go bust," Xu Lejiang, chairman of Baosteel, told reporters.

Custeel, a CISA-affiliated consultancy, said this week that 24 blast furnaces had suspended operations in October as mills scheduled overhauls, adding that the number was expected to rise as losses mount.

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Rio Tinto steals Vale’s iron ore crown ahead of Q4 decider

Rio Tinto’s new-found leadership status was confirmed by iron ore shipments stretching to a record 91.3 million mt in the third quarter, around 5 million mt more than Vale’s quarterly total for its fines, run-of-mine ores and pellet sales, latest company data show.

Vale, however, had something to brag about.

“We have the lowest cost in the world,” Vale CFO Luciano Siani exclaimed as the company unveiled its Q3 figures this week.

The outcome of lower costs aided by a weaker real, however, may result in prolonged and even weaker global iron ore prices.

A selloff in the real came as a result of political infighting, and slower Brazilian growth and with it steel demand, leaving Vale more exposed as its largest customers, China and Europe, fight over steel trade.

Vale is trailing faster growth from Australian majors, who this year posted stronger increases to volumes from new capacity ramp-ups. Vale faced delays in expansions.

The Rio de Janeiro-based company is still a year or more from making a bigger mark when it opens further new sections at its Carajas mine in northeast Brazil.

Vale’s Q3 shipment total of 86 million mt compares to shipments of 83.6 million mt in the second quarter — when Rio Tinto shipped 81.43 million mt — and 73.6 million mt in Q1, as iron ore operations in Brazil recovered from seasonal lows.

Rio’s iron ore production of 86.1 million mt in Q3 fell short of Vale’s quarterly record at 88.2 million mt for the period.

China Sep coal transport down 17.7pct on year

China’s rail coal transport fell 17.7% on year and down 4.9% on month to 154.4 million tonnes in September, posting the 13th consecutive year-on-year decline, showed the latest data from the China Coal Transport and Distribution Association.

Over January-September, China transported a total 1.5 billion tonnes of coal through railways, down 12.5% from a year ago, data showed.

Of this, 1.03 billion tonnes or 68.7% of the total was railed to power plants, down 12.3% year on year, with September haulage sliding 14.1% on year and down 5.7% from August to 106.93 million tonnes.

Coal-dedicated Daqin line transported 31.21 million tonnes of coal in September, a decline of 17.15% from the previous year and down 7.19% from August. Over January-September, Daqin accomplished a coal transport volume of 305.04 million tonnes, a decline of 10.17% from the year prior.

Shanxi Sep coke output down 11.4pct on yr

Coke output from China’s top producer Shanxi province reached 6.53 million tonnes in September, down 11.4% on year but up 0.13% on month, showed data from the National Bureau of Statistics (NBS) on October 27.

The coke output of Shanxi between January and September stood at 60.9 million tonnes, a year-on-year decline of 6.3%.

Shanxi’s coke market maintained a continuous downward trend in September, as most producers cut output amid the Beijing military parade in early-September.

At present, most coking plants of the province kept their operation rate stable at 40-80%, and some even began to slightly increase production. Inventories were kept in a proper volume.

Northern Hebei province ranked the second, producing 3.95 million tonnes of coke in September, falling 13.94% and down 13.41% from August. Total output over January-September stood at 42.27 million tonnes, down 1.72% on year.

Eastern Shandong’s followed with output in the same month at 3.65 million tonnes, falling 4.7% on year and down 0.63% from August. Total output in the first three quarters was 32.71 million tonnes, down 3.6% on year.

Eminent Australians press world leaders to ban new coal mines

Prominent Australians, including a former central bank governor, scientists and doctors, are urging world leaders to impose a moratorium on new coal mines when they meet in Paris for a climate summit next month.

The letter echoed a recent call by the president of Kiribati, one of a number of low-lying Pacific island nations that are under threat from rising sea levels as a result of global warming.

"A global moratorium on new coal mines and coal minne expansions could make Paris COP21 truly historic," said the full-page letter in the Sydney Morning Herald newspaper on Tuesday. It was signed by former Reserve Bank of Australia governor Bernie Fraser, Nobel Prize winner Peter Doherty, Wallabies rugby player David Pocock, religious leaders, and environmental advocates, among others

Australia, the world's largest coal exporter, has pledged to cut its greenhouse gas emissions by 26-28 percent from 2005 levels by 2030, a target criticised by green groups as not enough to limit global warming to 2 degrees Centigrade.

The target was set under former prime minister Tony Abbott, who said coal is good for humanity. He has since been replaced by Malcolm Turnbull, who has said he would attend the Paris talks, in contrast to Abbott.

The 61 eminent Australians said plans for Australia to double its coal exports are incompatible with efforts to curb climate change.

They highlighted a mine planned by India's Adani Enterprises in the untapped Galilee Basin in northern Australia, which would export more than 2 billion tonnes of coal over its life, among a range of projects on the drawing board.

"These coal export plans will have severe negative impacts on the health and wellbeing of citizens all over the world," they said.

The group, a mix of local campaigners and protesters from across the UK, have also formed a protest blocking the road, locking their arms into red arm tubes as part of a protest calling for an end to coal mining to protect the climate.

Around 20 to 25 protesters are at the site, with banners that read “end coal“ and “keep it in the ground”.

The mine, operated by Banks Mining, has around six million tonnes of coal to be recovered and supports 150 jobs, according to the company which has also submitted a planning application for a new opencast coal mine near Druridge Bay.

But the campaigners say the vast majority of coal has to stay in the ground in order to prevent dangerous climate change, and are calling for an immediate end to opencast mining and for theGovernment to phase out the use of coal-fired power stations by 2023.

The protest comes ahead of crucial UN talks in Paris in December which aim to agree a new global deal on tackling climate change.

One of the activists, Ellen Gibson, said: “Gone are the days when mining benefited millions – now opencast mining lines the pockets of millions like climate sceptic Lord Ridley, whilst destroying the landscape and cooking the planet.

“We need to keep 80% of all known fossil fuels in the ground if we’re to prevent catastrophic climate change, and coal is the dirtiest fuel of all.

“The Government needs to end opencast mining and shut the UK’s last power station by 2023 at the latest.”

Northumberland resident Rakesh Prashara, who is also at the protest, said: “Mining for more coal is holding us back, instead we need to be investing in the renewable energy that would provide new skills and jobs to the young people of our region.”

China Jan-Sep thermal coal imports down 39pct on yr

China’s imports of thermal coal—including bituminous and sub-bituminous coals, plunged 38.91% year on year to 63.6 million tonnes over January-September this year, according to the latest data released by the General Administration of Customs.

Of this, thermal coal imports from Australia fell 25.78% on year to 33.89 million tonnes during the same period; those from Indonesia decreased 41.38% on year to 20.93 million tonnes.

Imports from Russia stood at 7.47 million tonnes during the same period, falling 33.96% from a year ago.

Lignite imports over January-September were 37.33 million tonnes, down 26.07% from the year prior, with imports from top supplier Indonesia at 35.14 million tonnes, down 20.96% year on year.

China’s thermal coal imports in September amounted to 6.93 million tonnes, falling 25.91% from a year ago and down 3.72% from August.

That was the 7th straight yearly drop as well as the first decline after the 4th consecutive monthly rise, mainly due to the subdued demand from downstream sectors amid cooler weather and continuous falling prices at domestic market.

Iron ore price drops to 3-month low

The price of iron ore dropped for the ninth session in a row on Friday after a rate cut and economic stimulus measures announced by top consumer China did little to lift the bearish outlook for the commodity.

On Friday the benchmark 62% Fe import price including freight and insurance at the Chinese port of Tianjin slid 1% to $50.90 a tonne, the lowest in three months and down 8% in two weeks according to data provided by The SteelIndex. In July, the steelmaking raw material on a spot price basis, fell to a record low of $44.10.

The People’s Bank of China cut benchmark interest rates by 25 basis points to 4.35% and in an effort to stimulate lending lowered banks' required reserve ratio for the sixth time on Friday.

The attempts to re-ignite infrastructure spending is coming too late for China's steel industry which forges almost as much as the rest of the wold combined and accounts for more than 70% of the world's seaborne iron ore trade.

More astonishing is the fact that the Rio de Janeiro-based company was able to reduce cash costs to just $12.70 per tonne

Crude steel output in the country continued to shrink in September, down 3% to 66m tonnes, as mills struggle to remain profitable amid a saturated domestic market. Year to crude steel output totalled 609m tonnes, a 2.1% decline.￼￼￼￼ The World Steel Organization, last week forecast that steel demand in China is expected to decrease by -3.5% in 2015 and -2.0% in 2016, after hitting a demand peak in 2013.

While moderating demand in China can take the blame for the recent weakness, a surge in supply will likely push prices down further towards the end of the year and next.

Australia's Bluescope wins tax break to keep steel plant open, buys out US site from Cargill

Australia's biggest steelmaker, Bluescope Steel, on Monday said it would keep its flagship Port Kembla steelworks open after persuading the government to defer A$60 million ($43 million) in payroll tax.

While trimming operations in Australia, Bluescope also said it had agreed to buy out joint venture partner Cargill's 50-percent share of the North Star mill in the United States for $720 million giving it full ownership of the Ohio site.

Bluescope, which has already cut labour costs by $60 million by eliminating 500 job cuts, or 10 percent of its Australian workforce, and freezing wages, said the tax agreement with the New South Wales state government was crucial to keeping the Port Kembla plant open.

The changes drove Bluescope shares 12 percent higher in early trading to A$4.55, outpacing more modest gains in the broader market

Low steel prices and weaker demand in Asian export markets due to overcapacity have forced Australian steel companies to cut costs to survive.

Earlier this month, Arrium Ltd announced it would cut A$100 million a year in costs at its Whyalla steelworks in neighbouring South Australia state. Those cuts were in addition to an overall reduction target of A$60 million announced in August.

Before that Arrium reduced output from it iron ore business by a third to 9 million tonnes to stem losses on higher cost production.

In acquiring Cargill's stake in North Star, Bluescope exercised its right of last refusal, matching an offer from an unnamed third party, the company said.

"It is centrally located within a large scrap pool, operates close to its core markets, has low conversion costs and benefits from a highly motivated and focused workforce," it said.

Owing to the changes, Bluescope upgraded its first half earnings outlook by about A$50 million, saying earnings before interest and tax would be about 40 percent above the previous six months.

China could cut on-grid power tariffs before end of year - state media

China may cut on-grid wholesale prices of thermal electricity for the second time this year, state media said on Friday, a move which could reinforce the downward trend in coal prices and hit struggling coal mines.

More than 70 percent of coal mines have suffered losses in the first half of the year.

The country's State Council has proposed cutting benchmark on-grid prices, perhaps by an average of 0.03 yuan per kilowatt hour, from November at the earliest, the state-run Economic Information Daily said.

The move would come after a sustained collapse in coal prices, brought about by a huge supply glut of the fossil fuel, with benchmark Qinhuangdao thermal coal SH-QHA-TRMCOAL last quoted at around 380 yuan per tonne, down 27 percent so far this year.

On-grid tariffs are the rates power generators charge grid companies and prices vary from province to province. Thermal power, including coal, accounts for almost 70 percent of China's power generation.

A cut would affect electricity companies, reducing their profits by 126 billion yuan ($19.85 billion), but would have limited impact on the falling coal prices, the newspaper quoted an analyst as saying.

A price change in April cut on-grid prices for coal power by 0.02 yuan.

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